Down climbs over 12.000

U.S. Stocks Rise as Dow Climbs Over 12,000 on Economic Optimism, Earnings

Drop in Jobless Rate May Not Deter Fed From Carrying Out Stimulus Program

The surprising drop in the U.S. jobless rate to the lowest level in 21 months probably won’t deter Federal Reserve policy makers from carrying out their program to pump $600 billion into the economy, economists said.

Unemployment declined to 9 percent in January from December’s 9.4 percent, the Labor Department said yesterday in Washington. Employers added 36,000 workers, short of the 146,000 median gain projected in a Bloomberg News surveyed of economists, as winter storms deterred hiring.

Fed Chairman Ben S. Bernanke and his colleagues are placing less emphasis the unemployment rate and taking a broader look at the health of the labor market, economists said. Employers added fewer than 100,000 workers a month to payrolls on average in 2010, and 6.2 million people have been looking for a job for more than half a year, underscoring the need for faster hiring.

Unless we see that sustained level, that virtuous circle that basically he spoke to, the Fed’s not going to raise interest rates,” Gross said, referring to Bernanke’s speech.

Fed officials who want to end the Fed’s program to buy $600 billion in Treasury securities through June will point to the unemployment rate as a justification, said Reinhart, now a resident scholar at the American Enterprise Institute in Washington. Advocates of the program, called quantitative easing, will point to payrolls, he said.



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We may have recovery coupled with INFLATION!