Harper: Tepid Job Market To Keep Interest Rates Low

Apr 4, 2014

In this week’s Economic Report, Dr. Rick Harper reflects on the latest comments by Janet Yellen, Chair of the Federal Reserve.  Yellen says there’s still a need to boost the nation’s job market, with a continuation of low interest rates until it improves.

Dr. Rick Harper
Credit University of West Florida

“I don’t think anybody would argue with the idea that the U.S. job market is still tepid at best; in the doldrums would be another way to describe it,” says Harper. He suggests that Chair Yellen’s primary motivation was to back track on her first official press conference, when she responded to a question with a specific date on ending ‘quantitative easing’ (QE). Her comments sent the stock market reeling. Harper says, “People who follow the stock market are eager to see low interest rates continue, in the sense that it props up the value of the stock market to what might be an unrealistic level if we were to ever have normal interest rates again.”

Beyond the unemployment rate, factors of a weak economy include wages rising too slowly, high long-term unemployment, and employers’ reluctance to create new jobs.  Harper says some of that is related to the upsides and downs of the business cycle, but he notes there also are structural factors at work, in a changing labor market.

Turning to Florida, Gov. Rick Scott this week signs the Florida GI Bill aimed at making Florida the most ‘veteran-friendly’ states in the country. The GI Bill is one of the priority items for the Florida House and Senate, where Harper is serving as an economic policy advisor to Senate President Don Gaetz.

The most expensive feature of the measure provides in-state tuition for service men and women.  The new law also provides job and entrepreneurship training for veterans.

Additionally, the Florida House of Representatives has passed four different ‘Sales Tax Holidays’ for residents in the state, providing tax breaks on the purchase of school supplies, hurricane preparation supplies, energy efficient appliances, and gym memberships.  As a data analyst, Harper says sales tax holidays make tracking difficult. He adds that in combination with the Vehicle Registration fee reduction with other expenses such as people signing up for Medicaid “there’s not room in the budget for all of them; it will be fascinating to see which ones make it through the legislative process.”

Finally, the UWF Business Enterprises, Inc. (BEI) breaks ground on a new East Campus Restaurant Development site this Friday, April 4.  The new dining facilities will serve students and are expected to capture local residents driving by the high-traffic spot at the east entrance.  Harper says this kind of public-private partnership is a sign of the times as state universities and colleges become less dependent on government funding.

Dr. Rick Harper is Director of the University of West Florida Office of Economic Development and Engagement. He’s currently serving as Senior Economic Policy Advisor to the Florida Senate.  http://www.uwf.edu/oede/, rharper@uwf.edu