senate $500 tax rebate for electric vehicles. if you do have that old beater that you need to get rid of it and you decide that you will buy a new car, choosing an electric car you can actually get a huge rebate that will save you money at the gas pump and will save you money on your tax returns. that will make a big difference. we should reward communities that making it easier for folks to use electric vehicles and leading the way when it comes to clean energy. that is the kind of leadership that indianapolis is showing. you are installing natural gas pumps around town and you take another bahut they follow in your example. you have invested in clean energy. who they can be made that by

putting in in it to the unwarranted subsidies that we have given oil companies right now. what everybody to listen. oil companies, the top five have ranged between $75,000,000,000.445948416. the 7 5 billion won 25 billion. they still have a tax loophole that is costing taxpayers $4 billion every year.

if we are honest, we will admit that we are still going to have more work to do in getting control of our deficit and debt. it may be tempting for some to say let's stop investing in basic research. let's stop investing in the research that is needed. that is the temptation. i profoundly disagree with that approach. who need to cut of the things we do not need and still make investments if the things that that is what you do a home.

if your hours the cut, what do? he may decide to will put off staff. you are not going to stop making sure you have the money to help your kids go to school. the same is true for the federal government. it will help us out innovate and out compete america win the future. we are not plan to stop making investments that allowed plan x to find the new ways of doing business.

ind the new ways of doing business for the future. i want to make sure the federal government is right here with you as a partner with you as you move forward. we can do it and still the control of our deficit. for nearly 100 years this company has made its way forward. . they helped start the indy 500 back in 1909. it is to test new components. this same spirit of innovation and ingenuity is what i see in workers i talked to today. that is why i am so confident in this country and optimistic about our economic future. i believe in all of you. i believe in the american worker and american business.

this country is still home to the most industrious and determine people on the planet. there is nothing we cannot do so long as we put our mind to it. as long as we keep our eyes on the prize. i will keep on working with you to make sure we do that. thank you. god bless you. god bless the united states of america. ♪

♪ ♪ ♪ ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> they discuss deficit reduction. the remarks on the economy by the president of the stem francisco real 0 bank.

then in a speech by mary shapiro. >> the president and ceo of the american petroleum institute talks about oil prices. it'll keep them from rising higher. he discusses offshore drilling liability caps and other of company should continue ticket breaks. -- tax breaks. jon huntsman tillers the commencement address at the university of cholera and a. -- university of south carolina.

>> alan simpson criticized a a are a today at the time that chances -- and changes are needed to keep it solvent zarate para -- appears aarp where today. the commission presented a report to president obama in december with recommendations to address the nation's fiscal challenges. this is about an hour and 10 minutes.

restore reason to the fiscal debate. i think you are and for an informative and enjoyable session. >> thank you very much. we are excited deal of and the commissioner general today. they courageously will have the greatest impact on the american of economy than any issue we face today. when president obama signed the executive order creating the commission on fiscal responsibility, he said they are taking on the impossible. they are going to try to restore reason to the fiscal debate. come up with answers they did.

they backed the answers was straight talk about the deficit problem and the sacrifices that will be needed. they refuse to work with democrats. the democrats they worked with, the numbers man is irksome bowles. this was his third go at serious fiscal problems. we hope their time as a charm. as president of the university

of california, he tackled severe economic problems. none of the forecasts includes the commission. the top line is the baseline that the budget uses. this is the rosy scenario. they show what happens if we extend the tax rate.

these will continue to grow for the next decade. is the total overhang the public debt. it is $9 trillion. under that pact, the debt will double. this is the most rosy scenario. under those, it will proceed the size of the economy. but this straight to the heart of the matter. can you give us the broad outline?

>> share. >> i like it better. if you go back, and you look at the enormity of the problem, the plan takes it down to around $279 billion. it we keep it to about three- quarters. we take it down. if he could to the next one, we

take it down to around $16 billion. it is around 65% of gdp. on the first started working, we felt we were doing this for our 15 grandkids. we agree last we were doing it for our grandchildren. we realize the problem is so big that we were doing it for us. we faced the most visible fiscal crisis and the history of this country.

it is simply not sustainable. when i describe it could citation, and it is uncertain. as it will destroy it from within. bear give you an example -- let me give you one example. 100% of their revenue was consumed by mandatory spending and interest on the debt. it is principally medicare and medicaid. it is on education and infrastructure. every dollar was barrault. that was a form of failure.

we will be paying over a trillion dollars a year in in not inches costs. it cannot go to the next new thing for this country. it can go to foreign countries. as we look of that, it was easy to see that this is not a simple problem. it is not a problem we can blow our way out.

a hat if you want to try or of the taxes you have to raise the rate -- 81 to try to raise the taxes, we have to the at the capital gains and dividends are. it gives you zero. at the cannes not solely cut it off. all those guys go on our television air. we have to stay strong. we have to pay interest on the debt. we have to cut everything else by about 5785% to 85%. -- from about 75% to 85%.

it cuts the budget by about $4 trillion. $1 of which comes from revenue. $3 comes from cutting spending. that is part of the deficit- reduction weight put forward. we did not want to do anything that would really hurt this fragile economic recovery. we have to put it back to 2008 levels. we need to make sure we sastay safe and secure.

it will consume all bar restores. we make sure we are invest in the education. it reduces the deficit. we cut spending on the tax code. we cut spending in defense. because the wherever it could. >> that are planned. we go over defense spending.

what was the thinking behind it? >> let me say what a delight it is that is is an amiable companion. the so citing at can hardly believe it. -- so exciting and can hardly believe it. they visited with the president. it is three months to establish stability. here is the biggest one before this?

this will likely be very far. they would sit there for a little and say that he has now done him 3-1. we have a great idea. you will do the report. adjust the the two of us. they are not going to do much. without we would but do that. we got more people on board. this is an interesting thing. what we didn't predict what we did was hit everything.

-- what we did was hit everything. it is done about that. it is about solvency. do nothing. they do not do nothing. that is trusted, a mess something. if he is been more than you earn you lose your butt. reminded me this morning. the american people have this figured out. they are stupid because you cannot borrow 41 cents for every

dollar you spend. we said how many contractors do you fund? it is between 1,000,010 million. the change their names. come back. his shy for 10 years to get it out of the defense department. you cannot audit us. we do not know what is there. there are so many things i could go into, all of them incendiary. i am a veteran. i served two years active duty. i stayed in their reserve i would be a military retiree.

there are 2.2 million of them. that is a very small amount. they have their own health care. it takes care of all the did pendant. the premium is 470 a year. no copiague. it cost me 53 billion a year. if you touch it, you are cremated. it will kill you. for some point, this is the stuff we have to deal with. many of these retirees who never in combat.

they used a motion, guilt, fear or racism to cut off every prospect. now we will not go through social security. it is a bunch of fakery going on. it is hard to watch. he touched on this. more and more of our debt is held outside. the interest will not always coincide.

the zero oil exporting countries are over $200 billion. how much is a worry you that it is over. let's take china. i cannot see the screen. they have about $3 trillion worth of foreign currencies. there in the process of diversifying the currencies. what if they just stopped buying. what would happen to interest rates? how quick would it take how

would you like to have the future of your country and somebody else's hands? it is quickly moving from having an export driven economy to having a country that will have fewer and fewer demands for the u.s. dollar. it really is not spending a lot of time buying our hard assets. i am very worried. this is a problem have to face up to. >> he said he had this with thai want to protect them. it'd be interesting. we will protect them.

we will borrow the money. china is based in taiwan. it is crazy. >> the overwhelming question is can washington ballet itself without first experiencing a trainer? alan greenspan offered his view. it is put together. a disease for after the bond market. >> i was honored to spent 18 years of my life in the u.s. senate. the and did not matter what

party was there. we react when the hammer is down. there is some things you do not want to touch. you wait and wait to put it off. he go back and call me your constituents. -- you go back and call me your constituents. we are not ireland. we are not portugal. people know about that. there are many people who will insist that they will not vote for that under any

circumstances. they will cut foreign aid. there are congressional pensions. it may mollify their constituents. they thought they had the guts to go to medicare and solvency of social security. it will not matter. when the bond market guys come up, they have no questions about compassion. it is hammer time. >> i think we will get something

done because of this crisis. it is because what we think might come out of these negotiations. i think we have congressman ryan out there with a plan that is real and serious. it is honest. it is a straightforward. it does take $4 trillion out of the deficit. the president has a plan out there. it takes about 2.5 trillion dollars. it is locked and loaded. the commission has a plan out there that is coming in between those two. it is our hope that the signatures will be able to get

their next week and come up with a plan that puts it in legislative language. it is the big hope for this country. the risk we would run is that nothing does happen. you know as well as i do that when the markets lose confidence it happens quickly. let's say we do not do anything now between the election. i think there is some risk. they worked out there saying we could not do anything on the revenue side.

people say we really are not going to address this problem. i do think this? hearing presents us an opportunity to do something to take its essential step forward. we are not going to solve the whole problem between now and then. i think we can take a big step forward. >> president obama said the commission that you lead was structured to rise above the partisan concerns. you have a bipartisan supermajority to vote for the plan. we are back in washington. the president and house republicans have come up with broad frameworks for deficit reduction.

congressman ryan $4.40 trillion over 10-years. the federal budget issues a constructed in a tent near windsor. not that we can tell what will actually happen. that is the convention. it has been respected. how seriously can we take the president's plan as he stretches about to achieve this target. are these budgets for campaigning are governing? >> the figure was a mistake. they called a democrat. he is actually a republican. he does this and he can destroy the republican party.

what the hell were talking about. -- were we talking about. oh. [laughter] he did not really touch the fence. the president did not touch the fence. that is sad. we were there at this speech. it to be better not to buy him. the greatest mistake the president made it is that he should have waited to announce reelection until after the extension. everything he does now is tainted. he cannot get up and talk about getting their and

bipartisanship. we cannot do that and got and rep -- and grip it. he went out to detroit. to blasted it. he does that. they tried to nail brainer and cancer. -- john boehner and eric kanter. he tried to talk to him. the well was not poisoned. we were working through step.

there are several people on their that in not care about doing anything. >> let me contrast these plans. the plan is basically -- it is a serious straightforward and honest plan. he made to pay big decisions. he also made a decision as he reformed the tax code. he got rid of some of these tax expenditures. he used to reduce rates. he did not ease any to reduce the deficit.

having made these decisions, it forced him to make two other big decisions. he cut the non-defense spending and the other mandatory spending more than we did. it does place a disproportionate burden on the truly disadvantaged. if you do block it, he will give the governors more flexibility. you'll be able to cover the same number of people at a much lower cost. on medicare, he did what a lot of your company's did.

he turned it from a defined benefit plan to a defined contribution plan. he did that for all people of less than 54 years old. that is how he gets to is $4 trillion in savings. the budget was not taken very seriously. he is, with a pre-war -- he came out with a framework that is more like an outline. it is $4 trillion.

the way it is set up really does not stabilize the debt. it is a% of gdp that is up to go around 77 cents. have it is a a well 3%. he counteract that by putting in a fail-safe provision. if the debt does not stabilize, by 2014. he will put across the board cuts. it excludes all of the mandatory spending. he also is close medicare and

medicaid. as a look at what becomes of the new negotiations i like the fail-safe provision. i would want to see those across the board ratchet down over time. you might start at 2.8% and work your way down to 1.5%. i would want to have the trigger that forced us to include all spending. the democrats would not want to cut the expenditure. by having been there, you would

force them to use a scalpel and make smart cuts. that is what i would like to see. after both parties have committed themselves to tackle the challenges, standard and for it issued the warning on the status of america's triple a rating. he was right in changing the alleoutlook. they understate the extent of the problem. we are further along when we were a year ago. what do you see happening? quack if we do not think -- >> if we do nothing, it is a catastrophe.

i think it'll make the crisis we just with other -- the crisis we just went through a child's play. we think about what happens in a crisis like this, what happens to inflation and businesses in the cost of capital, they get flooded out of the market. i think it could be unspeakable. we need to step up to this problem. we need to put policies aside. we need to do what they are doing.

it took these six guys to come together and what is right for our country. we can solve this problem to date. american compete with any country in the world. our balance sheet problems are not what they are and other countries. they faced people that do not have a right to vote for democracy. our problem with the financial structure are so deep that if we do not face up we are glad to see this as really quickly. >> it appears that part of the difficulty has to do with the myths that surround this whole area. it is clear that the seriousness has not registered

with many americans. i had the opportunity to meet with the chairman. he emphasized that to me and our discussion. here is a statement he made in april of 200011. the only thing that enjoys majority support is to cut foreign aid. foreign aid is less the 1% of the federal budget. here not going to solve the problem cutting foreign aid. a put waste, fraud, and abuse in that category. evelyn suggest that the part of the problem. the budget is but between mandatory spending in discretionary spending which includes hundreds of domestic programs.

how much of what you have in mind depends upon cuts in discretionary spending? what impact would that have on the american quality of life? >> i think it is 12%. when you shop around, and did not get the biggest part. it is $700 billion. he is a lawyer and an amazing man. when he has been doing his work, he has been doing this for 20 years. the greatest myth of all a social security that they still. they still 2.3 million. -- they still 2.3 million.

social security is not a retirement program. it is to get them for43% of their wages. life expectancy was 63. and never had anything to do a disability. it was to be broke. guess who will take care of that?

16 people were paying in. how long do think two people a plan to sit still? the law says that if the inflation was zero, the other would be zero. what you do with people when you save the life expectancy today is 78.1 not 63. we say we are going to raise the retirement age to 68.

the economic years of organized, at 68 coming here is the key. we were stunned. the loss of so security is so clear that if the schedule of benefits cannot be paid, they will give only the payable benefits. that may sound like garbage. that is a real gut rancher. last month there is less coming in than going out. we get to this. you get payable benefits and not scheduled benefits.

you can own industry conditions and not do you a bit again. their magazine has really picked up. sex over 50 is the cover. now it is sex over 60 or 70. medicare will pay for it. it is on sexual dysfunction. it is a marketing instruments. patriot in here are just marketers. that is a harsh statement.

i intended to be that. they say we have to things they can suggest. we say what are they? we are still waiting. they hammer us daily. if social security is what you say, it is a noble experiment. it is something you pay into for your income. if we can get these things, that is big time language. we do hit the guys that need the most. the greatest men when this comes up -- the greatest myth -- and when this comes up, it is with

the savagery and deception. it to give them 125% of poverty pavement. seniors will get 5% kicks. to have done everything we can. now we say the cannot read, go to our website. they have to listen to the garbage that is creeping out. homage to you have rolling around?

-- how much do you have rolling around it? sixes and? -- 6%? [unintelligible] you anticipating one of my questions. -- you anticipated one of my questions. >> we cut it by $1.70 trillion over the next 10 years. we have cut it between defense and non-defense. when people ask us, we can tell you exactly what we would cut

dollar for dollar. we also put a fire wall end between defense and non-defense. congress could not go back and take all of the defense of the non-defense. we tried to get our spending back to 2008 levels. you can get it back there quicker. you do run the chance of disrupting economic recovery. we cut out the mandatory spending. we cut social security. >> the biggest driver in this

whole situation been mandatory spending. as president obama pointed out, on a current course healthcare debt will consume a big fella we are paying in taxes. the defense is health care. the plan and the house republican plan to tackle medicare. they do it in different ways. there can ever medicare from direct payments to providers into premium support to allow them to buy insurance like the health plan. he believes that competition and innovation will rein in medical cause inflation. he also count on big savings. he was learned to rely on exports is to limit the use of medical services. the commission called for a

long-term global budget. it limits growth and federal health spending to the growth rate of the economy. it does contemplate a support plan as one option. how confident are you that any of these approaches will actually bring health care spending under control? >> i am positively have to bring it under control. it is the biggest fiscal crisis and challenge we face. it is about 6% of gdp.

chairman of the federal reserve board of governors. this is 50 minutes.

>> i just became president of the federal reserve bank of san francisco. one of the challenges of coming from northern california and living in the bay area for many years is, as president of the san francisco fed, which includes nine of the western states, we have seven major league baseball teams here that i am is supposed to represent. being from northern california, i have my own abuse on that. one of the growth opportunities is for me to say the old dodgers. -- go dodgers. [laughter] i am working on that. we will see how it goes. this is my first opportunity to speak about the economy and monetary policies since taking on this new role. for a central banker,

communication is a central part of the doubt. it is essential that the public understands our actions and our strategies. at chairman bernanke's press conference last wednesday, the first ever by a chairman in the history of the fed, it was a major milestone. one of the most important policy questions as to do with inflation. a subject on the minds of americans from all walks of life. as anyone who is paying more than $4 a gallon for gas knows that the price for energy and food and many other commodities have soared. this is important for those with lower incomes and stretched budgets. despite the upturn in inflation, i do not think inflation will remain stubbornly high. this afternoon, i will explain why inflation has risen and why it is expected to recede open the next several months. i will also talk about the

prospect of the economic recovery. i will close about some remarks on monetary policy. i should start by saying this talk represents my views and not necessarily those of my federal reserve colleagues. i will start with the status report on the economic recovery. it is not nearly duty years since the economy started to grow again. -- it is now near the two year since the economy started to grow again. despite adding 1.5 million jobs over the past 13 months, there are still over 7 million fewer jobs in the united states than we had before the downturn. these recovery has sputtered at times. our progress has been disappointingly slow. that is not to bank surprising -- not too surprising given the type of recession we have gone through. there has been research looking at financial crises in other

countries around the globe. this research suggests that economic growth following banking and financial crises is often weak and inconsistent. some recent economic data has been lackluster. congress estimated the real domestic product as the broadest measure domestic activity rose 1.8% on an annual basis during the first three months of the year. that is quite a bit slower than the 2.8% growth we saw in 2010. winter weather and a few of the transitory factors held down growth in the first quarter. several more persistent forces have been at work. higher gasoline prices are at the top of the list of factors that have been a drag on the economy and will continue to do so for some time. over the past year, the price of gasoline at the thought has jumped by 1/3. this takes money out of the pockets of consumers, reduces

their ability to make other purchases. the jump in energy prices raises uncertainty, it saps confidence, and makes consumers and businesses more cautious about spending. consumer confidence as measured by surveys of households remains mired near its recessionary levels despite the improvements in economy. there are other headwinds in addition to the gas prices. the housing market remained severely depressed. the large overhang of unsold homes and the shadow of homes in dealing swishy offered little hope for significant rebound in home prices in the near term. government at all levels are cutting back. it is something we californians know all too well. there was a terrible disaster in japan. it was not just a human tragedy. it created bottlenecks in the global supply chains, especially in the auto and

technology sectors. this affected day united states as well as japan. -- the united states as well as japan. we expect growth to rebound to over 3% in the current quarter. the pace of the recovery will continue to build further strained for the remainder of this year and next year. in a reversal of the dynamic we saw in the darkest days of the canada crisis, we are enjoying a circle of improving and at the conditions, which support stop spending, leading to more hiring and production, and strong enough financial -- and stronger financial conditions. we saw this virtuous circle being a vicious circle where worsening conditions brought a worsening economy. the positive feedback loop is illustrated by the stock market.

stock prices are up 10% over the past year thanks to healthy corporate profits and a greater willingness of investors to take on risk. with their investment portfolios growing again, household are more willing to spend. this prompts businesses to hire more employees. there is an improving their -- and improving labor market. it grew by 200,000 jobs per month, a solid pace that should pick up further as the year progresses. based on data we got this morning and predictions by many economists, i think the data to be released on friday will be similar to that for april. we are on solid base for growth and jobs should improve. the good news on that is that these job gains should push down the unemployment rate from its current level of 8.8% to 8.5% by the end of the year and fall further by 2012. we face a long road ahead before

we reach blogger levels -- lower levels of unemployment. despite some ups and downs, the underlying recovery continues on a moderate pace. growth slowed in the first quarter, but it should pick up during the rest of the year when transitory factors restraining economic fate. i expect real gdp to increase 3.25% this year. this is sufficiently high to bring down the unemployment rate gradually. it will take a long time before we did ourselves out of the people we fall into during the depression. the timing is forging ahead. there is still an enormous amount of -- the economy is forging ahead. there are an enormous amount of problems out there. what is the current inflation situation? what are the underlying forces driving prices? what are the prospects for

inflation in the medium term? what is the response of federal monetary policy? regarding the first question, we have seen a substantial pickup or prices in food, energy, and industrial commodities. copper prices have risen 26%. crude oil is up 35% and corn 75%. this is cause for serious concern. sharply higher prices for many raw materials are draw -- driving up prices on a range of consumer materials including gas and food. the measure of prices that we at the fed can to watch most closely is the personal consumption spending price index. it increased at 3.8% and will break -- annual rate this year. the most participants in the fed

policy-making body with our -- this brings me to the second question. what is driving inflation so high? rising commodity prices for food and energy have been the primary culprit. the core inflation, which strips out food and energy prices, was only 1.5% in the first quarter of this year. it has averaged only 0.9% in the past four orders. when fed policymakers meet in core inflation, we get criticized. people need to put food on the table and fill the tank of their cars. so do i.. i totally agree. it is the price of the total household consumption basket of goods and services that we care about in terms of our inflation goal. that includes food and energy. we find it useful to look at underlying inflation, which includes four measures of

inflation, to help us untangle the elements of the inflation picture. measures of underlying inflation such as core inflation have been helpful in reducing overawed inflation. that is the reason we talk about it and analyze it. that brings us back to the question of why commodity prices have risen so much. some commentators have suggested the fed itself has contributed -- has contributed to the run- up. according to this argument, the fed policy of low interest rates is fuelling speculation in commodities. economic theory does teach us that lower interest rates will boost asset prices, including commodity prices. but it is unlikely that this is that can explain more than a small portion of the huge increase in commodity prices we have witnessed. someone at the san francisco that look at how commodity

prices reacted when the fed announced new policy action to stimulate the economic. if that prices were responsible for the commodity price boom, we should have seen commodity prices job each time the fed announced more monetary stimulus. researchers found that commodity prices fell somewhat after the new policy announcements. it poured in, they were not inspired by news that the fed was doing more monetary stimulus. looking at of the research and evident on commodity prices and monetary policy, i cannot see any convincing evidence that monetary policy play a convincing role in the huge surge in commodity prices lapsing. this is no surprise from an economist. i will say it is surprised the but as it is supply and demand. the rise in commodity prices can be traced to robust growth in emerging market economies. they display a ravenous appetite

for raw materials. chinese automakers sold 18 million vehicles last year. that is 1/3 more than in 2009. it is more than any other country in history, including the united states. at the same time, as the man is rising, we have seen supplies of some commodities curtailed by weather or political disruptions. another example is in north africa and the middle east. that has been a disruption -- a destruction of the global supply of oil. what do these fast rising commodity prices mean for inflation in this year and beyond? i believe the inflation rate, which i mentioned was elevated in the first quarter, will reach a peak by the middle of this year. it will start going downward. i view this as a top -- as a temporary bulge in inflation. we will return to 1.25 to 1.5%

annually. commodity prices are not likely to keep increasing indefinitely at a rapid rate. in recent weeks, prices for a number of commodities, including sugar and cotton, have fallen sharply. prices of certain key commodities in the futures market, such as crude oil, indicate traders believe these prices will not keep rising as double digit rates going forward. the numerous supply disruptions have pushed up supplies of food stuff. that is not likely to be repeated. even if commodity prices remain elevated, they will not keep pushing inflation up. the second reason for believing the issue will pete is that higher commodity prices generally represent only a small portion of a finished goods in the u.s. account. corn and sugar make up only a fraction of the cost of a box of

crossed the plate. most of the cost comes from the labor in layering and distributing the breakfast cereal. in los angeles, the center of entertainment, they pay for the year time of connie the tiger. this typically translates into small and increases in consumer prices. gasoline has small commodity input shares. in today's service income -- service oriented economic, this is the exception and not the rule. inflation will start to ease later this year. it is true that surveys of -- surveys show that consumers expect moderately high inflation of the next year. not surprisingly, they are worried about near-term inflation projects -- near-term inflation prospects.

ordinary americans agree we are seeing a transitory rise in inflation. survey results reflect the fact that inflation remains low and has stayed steady for several decades. based on that, the public believes the fed is committed to keeping inflation under control. as long as households, businesses, an investor inflation expectations remain stable, it is unlikely we will see an inflation and had become established. his leads directly for to the fourth reason to suggest the inflation pressure will ease. four decades ago, many labor contracts provided for automatic moving adjustments. automatic prices fell into higher wages. today, these clauses are a thing of the past. meanwhile, measures up wages and labor compensation, such as

employer costs, have increased only 2% annually. when you factor in productivity gains, a unit labor costs have been close to flat. these wage trends reflect the high levels of unemployment in the town. act as a powerful brake on inflation. for all the reasons i have mentioned, i believe risk of high inflation is low. overall inflation will be 2.2 5% this year. as i noted earlier, inflation should return to its underlying level of one. by to 1.7% next year. . .

and by last year, iflation had fallen to very low levels. that meant we were falling short on both counts of our dual mandate, on employment and

inflation. so we have kept the main interest rate close to 0 to stimulate the policy but the federal funds rate should actually be several percentage points below zero. you can't send it below zero so to provide monetary stimulus wave had to look to other means. since 2008 we've been actively buying instruments with the goal of pushing down longer term interest rates. careful analysis indicates that interest rates on longer term treasury securities are about a half percentage rate lower than they would be without this program. and loafer interest rates to

accept -- to help support the recovery and diminish unemployment. we have said we would leave the fed fund rate very low. underlying inflation is subdued, as we have explained but we do expect the pace of growth to pick un. the nature of monitor -- monetary policy is that a considerable time lag must occur are the we have to make our decisions based on where we think the economy will be many months ahead. for that reason we have been preparing a plan to start removing stimulus when economic conditions warrant. this is our so-called exit strategy. now, i won't go into the technical details and it's incredible the number of memos and decalede -- detailed

analyses we are doing thn -- on this but the basic elements of the exit strategy are draining bank reserves and reduce fering holding of longer term strurments. and the exact timing of the various stages of the plan will be dictated by the recoverive and in particular the paths of unemployment and inflation. and to give the public plenty of advance notice, that important communication i stressed at the beginning of my talk, these steps are likely to be signaled in our regular policy statements. the economy today faces many pitfalls. i don't believe runaway inflation is one of them because fed policy makers like the general public are aware of the cost to society whether prices get out of control. the experience of the 1970's was very traumatic and it's indelibly etched in our minds. during those bad oles days inflation did get out of control and it took a very harsh and painful recession in

the 1980's to recover and everyone has learned these lessons from the 1970's and is absolutely committed to making sure nothing like that happens again -- again. you can rest assured that the federal reserve is committed to low and stable inflation. i view a sustained period of high inflation is unlikely but if we do see signs of high inflation developing we will act promisely and decisively to ensure price stability. so thank you very much. [applause] >> um, of course, dr. williams will be answering questions. but if you will wait till the microphone is brought to you we'd appreciate it. thank you. >> i heard yesterday that

barney frank wants to take the rotational vote away from the regional presidents of the federal reserve based on his reasoning that you are beholden to your businessmen boards that elect you to your office and that they have the most to gain by movement in interest rates. how do you feel about that? >> so i -- i -- i disagree. i think that the federal reserve system, which is a quite complicated system and sometimes a byzantine in structure is actually, it has some great strengths too. so let me explain just a little bit how it actually works in terms of the fomc. 12 presidents of the 12 federal reserve banks. if all the positions were filled there would be seven governors on the board of governors. the presidents of the federal reserve banks are individually chose enchly -- by their boosheds directors.

the federal reserve is actually part of the private sector, not of the go. our board of directors includes members of the banking community and members from other groups representing labor and other parts of u.s. society much the 12 presidents don't all vote at the f.o.m.c. only five vote in any given year, on a rotation, although new york votes every year. san francisco, even though we represent almost a fifth of the economy, only get to vote once every three years. so the last thing i should mention is that the choice of the president by the board of directors of the bank, two important points. one is it has to be approved by the board of governors, and the boards of governors is chosen by the president and confirmed by the senate. the second is that under the dodd-frank act the board of directors who are from the banking industry, who are from banks shall are not allowed to be part of that selection.

so really what we're talking about are business people not in the banking industry. now, why i think it's a great system, obviously i'm biased on this but why i think it's a great system is it does mean that the federal reserve has broad -- a diverse set of backgrounds and views not only inside the beltway in washington but people from different back grounsgrourneds -- backgrounds whether in business or different backgrounds chosen by different groups of people, you bring all of them together and get the diversity of backgrounds and views and get away from perhaps the inside the beltway groupthink that could happen. i think it's kind of a crazy system at some level in how it's complicated, but i think it's a system that actually works wog -- well and speak for myself and my colleagues all

are in there thinking about the national economy, unemployment, inflation, we rm value the feedback we get from our business contacts and advisory groups, the groups we go out and see but we're just dedicated to what we can do the best we can do for the u.s. economy so i think that this is a system that i would keep the same. >> yes. i -- on that subject with the emphasis on real estate which is my focus, obviously we're all, the entire world is waiting for stimulus that will get this housing market back up . when as far as i'm concerned i don't know how many people agree with me on this, one of the obvious changes was increasing the requirements in order to get a loan, making it much more difficult and

eliminating stated income. have you analyzed this and do you have any personal viewpoint about a way that stated income parameters could be vetted -- wedded again within certain [captions copyright national cable satellite corp. 2010] ? and my thought process on it is with regards to the criminal element of fraud if that were in place and identified and if it were very clear what the consequences of flawed -- fraud on a stated income would be, would you alou it or do you have a thought on that? >> i think that this issue of the housing market and the banking sector and the connections between them and the u.s. economy is one of the dument challenges we face. so part of our goal on monetary

policy is we want to see the economy grow. we want to see people borrowing and lending again, people, we want to see the economy improving. at the same time we have a banking sector that has suffered, you know, severely during the crisis and we want to make sure that we have a sound and safe banking system for the future because without that, you know, obviously our economy isn't going to work. finally we have a third part of this which is the financial stability and the dodd-frank act which are, you know, we need to approach i think the issues of financial institutions, financial stability in -- you know, have we thought or are thinking about that relative to where it was before the crisis? we recognize the crisis revealed a lot of short sps -- shortcomings in our regulatory system. in my view these are just as challenging times. you want the economy to get going better, you want to make

sure the banks are safe and sound for our economy, at the same time we're learning the lessons from the crisis. i don't think there's any easy answers to any of these issues and i don't have a particular view on the stated income kind of issues. i i do think it's a very difficult problem of how to get these right, you know, to both not have too much regulation and too much of the banking system but at the same time making sure that we've learned appropriately the problems that led to the crisis and that are part of that and that we don't go through that again. so hopefully out of this process we'll get to a good place but it's a difficult set of choices and again it's a challenging environment because we're not starting at a good place. our economy is still weak and we have challenges in the banking system. so. >> questions?

>> could you please comment on the health of the economy in the western part of the united states, the area that you cover? >> sure. so again as i mentioned we, the 12th district of the federal reserve covers nine western states including hawaii and alaska and guam and the marianas. we got hit very hard by the recession. the housing bubble and crash obviously was more pronounced in the 12th district or in the western states than in the country as a whole. the tech sector was hit very hard during the recession when after the collapse of lehman brothers and those events we saw a complete contracting of business investment due to everybody basically hunkering down. third, global trade collapsed during the pre -- recession and that -- now it's coming back

pretty well, but that was another, a third hit. so if you look at the western states we got hit harder. unemployment went up more on average than in the country. the difference across the country, california was hit harder, utah was hit less hard. it has still lower unemployment than california. we're kind of like the atlanta fed district which includes florida and atlanta, those areas that got hit hard by these factors. we still have higher unemployment than the rest of the country on average. except for housing, we've seen global trade pickup, especially to emerging market economies. so that's a good thing. high tech is actually the brightest sector in the u.s. economy. high tech investment and spend sg is actually doning with -- very well, has rebounded from the recession and is doing great. theories the positives much the real problem in our economy is

that the housing sector, which is a big part of our economy, was hit really hard and is basically still deeply depressed, as i said. if you asked me a year ago where was housing going to be right now i would have thought it would still be low but starting to see signs of improvement. what's happened instead of that is we've seen house prices continue to decline further than i think we expected. we've also seen just a reluctant -- reluctance and we hear this from people we talk to and in the data, just a reluctance to get back into housing. people buying homes at small levels and very, very little construction going on. that was a big part of the hit we took in arizona and nevada and california. eventually i see the u.s. economy improving, the recovery gaining momentum and i think

california and the western states will share in that but it's really, i think, if you look at one factor that separates different parts of the country it's how big the housing bubble and crash were, how important they were for the different parts and those places like here where the housing crash was, bubble and crash was so big and pronounced, this is why, you know, we're still deep in the hole. >> you indicated that i believe that price stability was part of the mission statement and that secondly you felt that higher commodity prices had been driven by global demand. i believe you also indicated that you knit -- think the u.s. is recovering and will pick up the pace a little bit in the next quarter. does that fundamentally mean that you think global demand from other sectors of the world, maybe the emerging markets and countries, will slow down?

>> so that would depend on the individual country, clearly. china, which has been growing at an incredibly rapid rate, their economy, they are trying to slow, the chinese government and the central bank, are trying to slow that down somewhat. that would be an example of i think a very important country in the rest of the world that is going to be slowing and we'll see some moderation in the demand from that country. i will kind of go back through the history of the last few years of commodity prices a little bit. what we saw in 2007 and 2008 when commodity prices really peaked even as the u.s. economy was going into recession, i think what we saw there was this global demand and supply playing out and pushing commodity prices higher and higher. then we got hit bethe financial crisis and recession, commodity prices plummeted shall since then they've been moving back up and depending on which one you look at they're not mere --

they're nearly higher or higher than 2008. maybe we're moving back on to that trend. what i don't think you want to do is extrapolate the growth rates we've seen in the last few years to say oh, it's going to grow 10, 20%. i don't think commodities like oil prices are going to come down sharply. not making any predictions but i don't see them based on supply and demand combroge rapidly going forward. i think it's more kind of an adjustment to the huge shocks we saw. the other thing about commodity prices is they are asset prices and people trade on them as such which means that premium blit fact that the global economy has rebounded, things, we got through the crisis. investors are looking forward many years and thinking about what the value of these assets are, the commodities are so

that's why you dent -- tend to see greater volatility than you do in other prices but -- so looking forward i see the u.s. economy and european economies continuing to improve. i don't see the ever merging countries growing as fast as we've seen very recently but also don't expect some big upward or downward shift in commodity prices. >> thank you. a little closer to home, how far behind the nation's recovery will california lag if we don't find a way to cut our tax rate and pull employee pensions under control. >> so as i -- in terms of the -- you know, i answered the issue of i guess the economics in terms of the different sectors of the economy. in terms of the government and the budget problems today in terms of the pension problems i see that, the pension problems obviously as being part of a longer term problem. i think that for california as

many other states and you could seen say the federal government, it would be very helpful and productive if we could deal with our longer term problems and come up with solutions about getting our longer term finances in order. i think that would be very beneficial because there's a lot of uncertainty today about what's going to happen at the national level and also at california's level in terms of what policies are going to be and how we're going to deal with them. in the past i think california has been a very dynamic, innovative part of the u.s. economy. i think whether it's technology, entertainment or many aspects of that. i don't think those fundamentals have changed, but i do think that, you know, having good, solutions for longer-term budget problems is an important part of making sure that california and this region remain competitive and reduces uncertainty about the future.

>> follow-up question? ok. >> all right. yes, just on the subject of commercial real estate stimulus , i've seen very, very little action. do you have any thoughts op -- on what could really stimulate lenders to open up again and loan on smaller residential or commercial investment property loans? >> you know, what i -- when i look at or listen to issues about why aren't people borrowing or lending, you see in the small business world that a lot of businesses don't have collateral. the economy is still weak. their conditions aren't as good. the one positive i do hear in parts of the district is that in the commercial real estate,

in apartments and rentals, there are some signs in some areas where demand for housing, multi-family housing, has increased. one of the hard things in this environment is there's so much uncertainty. the economy is so weak, unemployment is so high that i think it's hard for people to read through kind of what's the trajectory we're on. this is one area i have heard some positives that the multi-family real estate area is, you know, apartment buildings and things like that were seeing some improvements. the real problem is i think everyone got burned on housing and commercial real estate and there's an aspect of how do you get confidence back? how do you get people back to feeling comfortable with, you know, the projections they have and economic conditions? i don't know if there's policies that can improve that. think -- i think it's part of

the healing process and part of it is psychological, business people to investors to get back to feeling comfortable, taking good greater risks and investing in longer-term investments. i mean one of the thing we view as a fundamental driver of this recovery is what we just call a healing process. during the financial crisis there was a panic, there was fear in everybody, whether it's a family or businesses or investors, were so afraid to take any risk or take any kind of commitment, longer-term commitment in terms of economic investment or something, that everyone just pulled back at once and that's been improving. the willingness of banks to lend, the willingness of businesses to borrow has been improving but it's just a very gradual process. going back to the experience that the economies have written about going back hundreds of

years and looking at many countries, it's a common theme. it's very hard to get people to put the past behind them and get back to feeling comfortable and willing to take on risk and get back to business and i think we're seeing that go on. all of owe macroeconomic models tell us that the economy should be growing much faster than it is and i think that's a big part of the story. >> great to hear your confidence in what's happening here in the united states both in terms of broth picking up and also price stability. there's been a fair amount written recently about concern with the value of the dollar dizz -- vis-a-vis some of our international competitors where they may have a healthier fiscal situation, much higher groth rates, and i'm curious what you think the fed's role should be should the dollar come under significant attack due significant concerns about

our fiscal woes? >> so this is the easiest question i'm going to get because i'm given very clear instructions never to speak about the delarments [laughter] >> the dollar is the purview of the u.s. treasury department and given that this is the first public speech i've given since i became president i'm glad you asked and i can call it a win. so thank you. i hope that didn't end the other questions. >> last week former chairman greenspan commented that he thought it was important that we roll back the bush tax cuts. do you agree >> so unlike our former chairman who obviously i worked for for many years, you know, i'm not going to comment. i now sound like i'm ducking, but i actually feel like i don't want to comment on what fiscal policy in particular

should be for the u.s. government. i think that one of the things i think the fed has which is really valuable is its independence within the government to make tough monetary policy decisions and, you know, eventually at times unpopular monetary policy decisions in order to achieve our goals. one way may be to keep that independence is for me to stay out of commenting on what bill they should or shouldn't pass or what should be done about tax cuts. but as an economist i will say the general principle that we have an unsustainable fiscal situation at the federal level is a huge problem and we need it one way or another and that's up to, you know, the elected officials. find a way to solve this unsustainable long-term fiscal situation and we need to remove that uncertainty. it's obviously something people have been worried about and

we've known about for a long time. there are tough decisions out there but at the same time it's important that we have a long-term plan and clarify that so that people understand that. when i was at the council of economy survivors in 1999 and 2000 it was something we worked on the most. back then we had the lock boxes and stuff we talked about but the principle we walked -- talked about was we need to make sure there are long-term budgets and government's situation is sustainable and that we have the right policies for the long term and i thought we had made a lot of progress. a lot of, you know, different views on how to do this but i think that's an important goal and i would like to see that happen. but i'm not going to state about how it should happen. i just think it would be very important that we confront these long-term problems and sooner rather than later.

>> given that small business still has limited access to capital but historically about half of the jobs have come from small business, how do you see employment increasing in california specifically. will it be able for it to come from small business? and if so how might that look? >> so this distinction between the financial conditions of small business and larger corporations is really striking. u.s. corporate sectors, corporations in the u.s. as a group have access to credit, stock markets doing well, bond markets are doing well, the amount of cash on hand? -- in the u.s. corporate sector is very high. lots of liquidity. so the condition of the corporate sector as a whole is doing well and improving. then if you turn to your question about the small business owner, well, what was

their capital? for many small business owners the capital was thekitti in their homes and the lick quidity was their credit -- liquidity in their credit card and with the decline in house prices you have lost your credit and the ability to fund through difficult times and of course with the very severe economy which has hit small business very hard, the actual getting through day to day has become much more difficult. so turning to your question of how we are going to get out of this period, i think it's going to continue to be very challenging. i think again they don't have the equity -- there is available credit and i think banks have the funds to lend but again you look at businesses who may have been hit very hard, lost money or had difficult times over the last few years, you know, their financial conditions may not look so good.

so i think this is one of the drags on the economy if i could just speak in term of the national outlook, this is one of the important reasons i don't think we're getting the strong recovery that you would have expected. the hope is that when the rest of the economy does grorks that people have more money in their pockets, there are more jobs, like i said we've added 1.5 million jobs so far and we expect that to continue to improve that that will give consumers money to go to businesses, start buying the goods and services and that will be part of that healing and improvement cycle but i completely agree with the premise that we basically have these two parts of our economy. one is actually doing quite well and you hear a lot of the headlines about this whether it's chrysler, ford, or many other companies then you have this other main part of the economy, a major part of job growth in recoveries and

they're still struggling the it's one of the big drags why we're getting 3.25% growth. people often talk about v-shaped recoveries. one like we had in the 1980's, that's 7% growth. that's what a v-shaped growth is. this we're doctor year we're talking about 3.25%. we're maybe optimistically talking about 4% next year but that's, you know, little more than half what we saw in previous recessions. >> last question? >> as an economist are you concerned about the amount of national debt held outside america? >> terms of u.s. debt held by foreign countries? >> exactly. >> i guess i view that as really a conscious decision of other governments that they want to hold by far the most

liquid and safe international asset out there, which is u.s. treasury securities. if you look at -- i'll go back 15 years to the asian crisis of 1997 and 1998 -- one. lessons from many asian countries was that they didn't want to have to go to the i.m.f. if something went bad. so one way to not have to go to the i.m.f. in a crisis is to have lots of u.s. treasuries on your books so you have this buffer. those southeast asian countries accumulated huge dollar assets because they wanted them in case of another crisis. you look at china's policy of basically managing the exchange rate for their own political and economic goals, the chinese government is making these decisions that this is what they want for their economy, a side effect of that is that the exchange rate would be pushed up and so one way to manage if

-- this is for the chinese government to buy quite sizeable amounts of u.s. securities. they choose u.s. government securities, that's their choice along with other securities. so i view the fact that these countries are holding these large amounts of u.s. treasury securities as decisions that they've made based on their own economic political concerns and so to -- two points of that. that serves their kind of goals. i don't think those are going to change that much. chinese goals, chinese policies in any -- my view aren't going to suddenly say oh, we don't want to continue doing what we've been doing. they've been successful, been growing very rapidly over the last decade and i don't see them wanting to change that. so i don't see a big risk. you see the questions sometimes, what happened if tomorrow they wanted to sell a

billion dollars worth of these securities ar a trillion dollars. the problem with is -- that thinking is there is a reason why they've been doing this and those reasons i think will continue. so those things don't bother me that much. i will back up and say we do have an unsustainable situation in terms of the u.s. trade deficit. if you go at it that side, in terms of the huge you deficits, it's a problem for the u.s. economy and something we need to get on a more sustainable path but i view that as different from the fact that foreign governments decide to hold lots of u.s. securities. >> please help me thank john c. williams, federal reserve, san francisco. [applause] >> thank you v?

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> the committee willome to order. i want to thank everyone for being here, and i have an opening statement i will make him and then returned to our vice chair, congressman brady, and the other members who want to make a statement before introducing commissioner hall for his statement. we are again please have commissioner hall here come his

team here with us today. and we appreciate your service to the country. we have a lot to report on today, but i wanted, before we get into the numbers for this month, i just wanted to add a few words about some of the trends we have been seeing over the last couple of months. by the labor market is still facing significant challenges, we know that unemployment is too high, and over all employment well below the levels prior to the recession. we have seen some real strengthening in the labor markets since the spring of 2010. and more private sector jobs have been created and the unemployment rate has begun to come down, though it kicked up this monthnd will get that -- to do in a moment. if we look at the last 14 months, we have now recorded over those 14 months private

sector job gains, internet time have added to .1 million private sector jobs. since the beginning of 2000 of the labor market is also shown resilience in the face of rapidly rising oil and gas prices. continued weakness in housing, slowing, export growth in winter blizzards that delayed some investment in hiring. against these challenges the trend has been clear. in eight of the last nine months, the economy has added more than 100,000 private sector jobs during each month. in february, march and now april, we've added mre than 200,000 private sector jobs each month. and i think that's a very good seri syed, a very good trend. so we're moving in the right direction. we're benefiting in my judgment on the actions taken in the last two years of 2009 and 2010 in

dealing with this challenge. these actions that we've taken have put us on the path to growth, and i'm pleased to see some signs of that this month as ll. today's economic -- today's employment report i should say, provides further evidence that the labor market is getting healthier as the economy continues to improve and the recovery continues. during april, the economy added 268,000 private sector jobs. due to the loss of government jobs overall, the economy added 244,000 jobs in april. one of the charts behind me clearly shows the trend in employment over the past 18 -- i'm sorry, the past 14 months, a sign that some of the work that we have done in the last 18 months or so has begun to have

an impact. one sector that has been showing sustained employment growth is the manufacturing sector, a key source of good paying jobs and central to our nation's long-term competitiveness. in april, this sector added 29,000 jobs, and since the end of 2009, manufacturing has added a quarter of a million jobs. in addition, the professional business sector added 51,000 jobs, its ninth consecutive monthly gain. as we know from the news this morning and we'll hear more about this, obviously in hearing, the unemployment rate has aged up to 9.0, from 8.8 in march, while down from its peak of 10.1% in october of 2009. the unemployment rate remains too high. with 13 points 7 million americs looking for work, we can't find it. as chairman of this committee, i

monitor these unemployment numbers for each demographic group to ensure that its overall employment, the overall employment rate continues to drop. the unemployment rate falls for every group. but enforcement that's not the case that the unemployment rate for this month for workers with a disability just by way of one example, workers with a disability, their unemployment rate was 14.5%, compared to 15.2% a year ago. the high rate of unemployment among people with disabilities underscores the need for legislation th i and others have worked on. i will be created using along with congressman crenshaw of the florida the achieving a better life experience act, the so-called a ble, able actor in the previous congress this legislation had substantial bipartisan support in both chambers. the a.b.l.e. act will give individual with disabilities and

other families access to new highly flexible tax-free avings accounts that could be used to help cover a variety of essential expenses for people with disabilities, including employment training, and educational expenses. in combination with other support, the a.b.l.e. act can help people with disabilities gain new skills and trainingnd strengthen their employment prospects. additionally, when we look at the cato demographic groups, the unemployment rate r veterans was seven points 7%, which is below the overall 9.0 rate. gulf era veterans meaning those who have served in iraq and afghanistan facing unemployment rate of 10.9%. so obviously higher than both the overall federal rate, higher than the overall unemployment rate. the unemployment rate in the african-american community was 16.1%.

well above, above its pre-recession level. that number for african-americans was as low as 7.7% in august of '07. hispanic workers, the unemployment rate was 11.8, which is much higher than it was in 200 so we've got to examine these numbers as well as the overall rate. so in summary, the unemployment rate shows that we are on the right track. the economy is continuing its recovery. the economy is stronger than a year ago. more people are working. fewer unemployed, but we must do more to continue down the path of this recovery. the first quarter, the first quarter of gdp, the data show the recovery is modest and the recent spike in oil and gas prices continued weakness in the housing market present real challenges.

federal reserve chairman bernanke and others have noted that the weather and other factors contribute to the slow down in the rate of economic growth in the first quarter. while they have said that, it's important that congress tackles issues that will protect american workers and families, now and into the future. i believe we need to stop subsidizing the major oil and gas companies at a time when the price of oil have spiked, and the profits have surged. we have this strange situation where they get ur tax money, they are getting record profits, and the gas prices for families go through the roof. i think we must crack down on the unfair trade practices that china engages in on a daily basis, and we need to put our fiscal house in order. cutting spending, reducing waste, fraud, and abuse, and bringing down the deficit and especially long-term debt. so the job before us is to build upon the progress of today to

creating more jobs and bringing the unemployment ratedown, but i look forward to working wth members of the committee on these and other challenges to support the economic recoveries come and now i'd like to turn to our vice chair, congressman gr greg. >> thank you, chairman. dr. hall, we welcome you and your colleagues again this one. during april, initial unemployment claims surged from 395,000 for the first week, the 474,000 for the last week in april. the last time that initial claims were this i was october of last year. this development is extremely unsettling as we've been expecting continued improvement in the labor market. while the job growth is welcome, today's employment report coming on the heels of these troubling initial claims data is showing some disconcerting sign. 9% unemployment and a rising number of number of workers who recently lost their jobs are disappointed statistics.

we need is still faster private sector job creation, or otherwise millions of u.s. workers will language in unemployment, millions more will remain under employed or live in fear of losing their jobs. the conomt recently asked question, what's wrong with america's economy. in answering his question, an economist put it to america's public finance in this labor market. moreover, they say the recent decline in the unemployment rate is misleading because it's a result of surprisingly small growth in the workforce as discouraged workers drop a. the labor force participation rate remained at the lowest level in more than a quarter century. it's frustrating beyond words to see the excruciatingly slow progress in employment growth. especially why president obama pursues policies that obstruct economic activity and job

creation. the energy manufacturing services industry in america is a prime example. under this administration, the energy manufacturing and energy services industry is suffering from the fact of the drilling moratorium on offshore and. threats of actors tax changes that will shift jobs in production overseas. we should be content with pouring over these employment numbers month after month, and bemoaning the slow progress. perhaps we can blame it on the weather or china or on american energy, but we know what is causing this growth problem, so let's fix it. let me sure you again as it did at last onth's hearing, the table job performance during and after this recession compared with a during and after the other two major postwar recession. this chart demonstrates how we are underperforming relative to past experience. this is an exceptionally weak recovery. there is no excuse for the dismal job performance.

you cannot expire placing the financial crisis caused severe recessions, but then failed to encourage private sector growth by every means possible. why doesn't the president have an obsession with raising taxes quick wide as he pursues with his green jobs mantra when the 1% of our energy sector for which wind and solar account clearly cannot revive america's job market. americans are demanding real solutions. jdc republicans released one page from the summer and another from the fall last year that warned treating the bp oil spill as an environmenta disaster be a mistake about it on the second paper came out in october the price of crude oil hedges risen to $80 per barrel. these papers explain the importance of continued ploration department in the fastest growth areas for oil production in the country to help counteract future oil price volatility's. in 2010 the united states with the largest source of world

supply growth outside opec on the strength of offshore production, but they should the energy information administration expects federal gulf of mexico oil production to fall by 240,000 barrels each and every day. energy consulting firm estimates the drop of 375,000 barrels per day in 2011 or the production because new development wells could not be brought online. if those bills are important, how does that help stabize oil price? how does that help our economy? how des that help our jobseekers? the price of august '01 hundred dollars per barrel, of average price of gasoline nationwide is just shy of $4 per gallon. the private sector is boosting labor productivity their first quarter productivity was up by 1.6%. however, businesses are also sitting on $2 trillion of cash that they won't invest because of regulatory uncertainty and fear of higher taxes and

inflation. therefore, businesses are not creating new jobs necessary to we employ more people, and increase the nation's output sufficiently to generate enough tax revenue, to support those who are sick, retired or remain unemployed at the annual rate of real gdp growth slowed to1.8% in the first quarter. president obama's put the federal reserve in a position where he feels compelled to hold the federal funds rate at zero, why hundreds of billions of dollars worth of treasury bonds. the joint economic committee republicans just released a paper onhis subject as well titled too loose for too long. the federal reserve is taking great risks with inflation, would not be necessary if the other levels -- levers of the private economy that the government can impact were set to go. dr. hall, i look forward to your testimony. >> thank you. congressman cummings. >> thank you, mr. chairman.

i want to thank you for calling this a today to enable us to examine the current state of the plug-in or nation that i also think a witness, dr. hall, for appearing before us today, and for following up with my office return my question from last month's hearing. we learn from today's report, mr. chairman, in april the private sector added 268,000 jobs resulting in an increase in nonfarm payrolls of 244,000 jobs. these numbers are heartening because they follow 13 consecutive months of positive job creation. in fact, 1.8 million new jobs have been created since februa february 2010. when contasted to an earlier period, january 2008 through february 2010, a period during which our economy shed 8.8 million jobs come it is clear that we have averted a

disaster. nonetheless, other indicators clearly show that we must continue to make job growth our top economic policy priority. we learned yesterday new claims fo unemployment unexpectedly rose to an eight-month high of 474,000 applications. there are curly 13.7 million americans who are unemployed. almost a third of these individuals have been unable to find work for more than one year. one out of every 10 americans without a college diploma cannot find work. and one out of every six african-american workers remain unemployed. equally worrisome was the report monday by "theall street journal" indicating that there are currently 5.5 million long-term unemployed americans who are no longer receiving any

employment benefits. these are our fellow americans, and they are fighting for survival. on april 18 i held my annual job fair, which, in baltimore, which connects employers with job seekers, and thousands of people attended. i saw firsthand the determination and humility of my constituents who are so basic and opportunity to provide for themselves and for their families. they are resilient but they need a chance to succeed. that is why i commend congressman, democratic colleagues, for earlier this week unveiled a continuation of our make it in america agenda. this agenda consts of numerous bills that will support job creation today, and in the future by encouraging investment and innovation, infrastructure and education, right here at home in america. unfortunately, i fear that my friends across the aisle are sacrificing our futuren an

effort to pay off debts created by tax breaks in two wars. nobel peace -- nobel prize-winning economist joseph stiglitz wrote in politico last month, and i quote, the ballooning of the deicit is understandably move deficit reduction back to the center of the debate. but the best way to reduce the deficit is to put america back work, and, of course. yes, instead of making these critical investments, the house majorities budget proposed this last updated programs, headstart and pell grants for college students. this week the house majority voted to pass h.r. 1214, which would repeal the section of the affordable care act and funds for construction and improvement of school-based health centers. funded the construction of the centers no only ensures children access to these vital and cost effective services, it creates jobs in ne of the hardest hit sectors of the economy, construction.

the majority proposed cuts with a school-based health centers, or job training programs, are osnsibly defending with the argument that tough times require tough choices and sacrifices. unfortunately, the senseless cuts fail to meaningful reduce the debt and isifferent hundreds of thousands of jobs and the well being of our fellow americans. this is not the time for symbolism. this is the time for smart choices that will create jobs, and once again, make our nation in the land of opportunity for all americans. i urge the house majority work across the aisle to find solutions that will reduce te deficit, help the middle class and put americans back to work. i thank you for the sharing and i yield back. >> thank you, congressman cummings. dr. burgess? >> thank you, mr. chairman. dr. hall, commissioner hall, always good to see. always good to start the month off with commissioner hall. i do want to talk about why the

u.s. economy is not recovered in some of the steps we can take to bring the economy back. i'd like to should offer as an exampl the state with mr. brady lives and where i live, texas, as a good example of the direction where we would like should head to the rate in texas is a .1%, certainly below the national average. certainlmuch higher than we would like you to be in the state of texas, but nevertheless the texas economy has performed better than any other state because of, why? a job from the radar machine, no state income taxes, and the fact that texas is a right to work state. as of march annual job growth in texas was 3.6% compared with u.s. growth job rate of 2%. the dallas offense has unemployment rate in texas wld be even lower except for the fact that texas has had a rabbit

population increase in the last 10 years, of which we are all aware. we also accounted for 14% of the united states employment growth over the last year or the agreeable weather in texas, better job conditions are attracting people from all over the country, and people are voting with their feet and moving to the lone star state. over 200,000 jobs were created in the last year. other states could achieve this growth by duplicati texas' job from the environ. in spite of the statistics our economy in texas is not perfect. we are concerned about unemployment rates for our young, people just getting out, beginning their earning years. and put rights for minorities are unacceptably high, and the overall unemployment rate is still as i said over 8% and that is-texas. but the statistics cited earlier in the shade compared to the rest of the country omething in texas is working, and perhaps washington and other states

could consider a more job friendly regulatory regime in order to reste those jobs that mr. cummings says we need in order to recover the economy. one sector of the economy which i would like to focus is the housing market, housing prices have continued to drop in demand for homes remains low. the housing market which helps drive our economy is in there that they can create jungle do we need to boost our recovery. i'd like your dr. hall today to discuss the housing market strike on the economy and how that affects our national growth. another a of concern already mentioned by other people is high commodity prices to consumers across the country face hgher oil and food prices. if we don't want to economic revival to stall, these prices have t come to. the goodies yesterday is that oil prices tend to come under $100 of their for the first time in a long time. in fact, it was rather a significant draw. what happened yesterday? oh, the house passed a bill. here we are innocent today and i

would just mention to the senate that our bill yesterday to expedite lease sales in the gulf of mexico, those very places that have been delayed or canceled by the administration in the past year, the fact that we're willing to expedite those leases, lease sales had a profound effect on those people who like to eculate and hedge in the oil market. they saw the republican house was serious about addressing the issue of the subplot of our oil produced within our shores. the administration has harmed offshore exploration of the past year. i don't think there's any question about that. we've seen the effect by the price at the pump. what will not create jobs is the debt, and the federal debt at $14.3 trillion, the number has grown so large that most people simply can't comprehend it. they have given up even trying. canada's debt to put it in perspective is about half a billion dollars, half a trillion

dollars. the federal government must find ways to operate like a normal family. we'll hear about cuts that need to be me. one of the first things we probably need to do is cut up the government credit card and stop spending. the talk in washington has been out cutting spending, and there are cuts that need o be made but there are other things we could be doing here in congress to cut down on government expenses which are things like waste, which in turn free up resources for congress to reduce the deficit and help those americans who are out of work. let me just comment briefly and i will submit the rest of my comments for the record, but mr. cummings mentioned h.r. 1214 the past history. this was a bill that would take back $100 billion, i believe erroneously included as a forward appropriation, a blank check, if you will, a blank post dated check that was included in the affordable care act. affordable care act is riddled with this type of policy where

the federal government has written blank checks posted them, put an envelope and all of them are overdrawn the american account. yes, this was about to the small sum of money, $100 million. but here's the do. this money was for the construction of clinics. e money set in stature. the money could not be used to hire a doctor or nurse or anyone else to provide care in that clinic. that's crazy. the american people recognize that's great. even the administration recognize that it was crazy because this is the only one of the so-called cut bills in the affordable care act with the administration has refused to issue a veto threat as a statement of administration policy. even the president was embarrassed by slipping this $1 million into the affordable carect. i assume it wa done over here in the senate for some reason as a payoff to someone. i can't identify who or how our why, but that'sthe way most of these things were. but it was appropriate to bring this money back. we are not against school-based

clinics. we are against the funding of a clinic with no vision for funding for stepping that clinic. the normal federal qualified health centers statute says we will not build a. you build it, we will help you staff it. this legislation to turn things on its head. as appropriate to reverse that course. i thank the chairman for is indulgent and iwill yield back the cost of a time and submit the bows of my statement for the record. >> dr. keith hall is the commissioner of labor statistics for the u.s. department of labor, the bls is an independent national statistical agency that collects, processes, analyzes, disseminates essential statistical data to the american public, the u.s. congress, other federal agencies, state and local governments, business and labor dr. hall as absurd as a chief economist for the white house council of economic advisers for two years under president george w. bsh. prior to that he was chief economist for the u.s. department of commerce. dr. hall also spent 10 years at the u.s. international trade

commission. he received his ba from university of virginia and his ph.d and m.s. degrees from purdue university. doctor, thanks again for being here. we are grateful to have your testimony. >> mr. chairman, and members of the committee, thank you for the opportunity to discuss the employment unemployment data we released this morning. nonfarm payroll employment increased by 244,000 in april, and the output rate edged up to 9.0%. over the last three months payroll employment has risen by an average of 233,000 compared with an average of 104,000 in the prior three months. in april, employment increased in several service providing industries, manufacturing and mining. retail trade added57,000 jobs in april. this increase followed too much in which retail employment changed a little.

over the month job gains occurred in electronics and pliance stores, building and garden supply stores, and automobile dealerships. employment increase in general merchandise stores offset a decline of similar size in march. employment in professional business services rose by 51,000 in april. since the low point in september 2009 employment in this industry has increased by 745,000. several component industry continue to add jobs in april including technical consulting services, computer systems and design services. employment in temporary help services was essentially unchanged in april. employment in leisure and hospitality grew by 46,000 over the month. ..

>> since a recent low in october of 2009, mining employment has risen b 107,000. other goods construction climate was unchanged over the month. it's shown little movement since early 2010 after falling sharply in the prior three years. employment in state and local government continue to turn down in april losing jobs since the second half of 2008. turning now to measures of the survey of households, jobless

rate edged up in april. the rate was 0.8% lower than in april ofast year. there was 13.7 unemployed persons and the number of people unemployed for less than five weeks increased by 142,000 in april. the 27 weeks and over declined by 283,000 to 5.8 million. other households indicators show little to no change over the month. the labor change participation rate is 62.4% since january. the employment to population ratio changed little at 58.4% in april. despite changes in late 2009, the ratio showed little movement. the number of individuals was at 6.8 million.

enrollment rose by 32,000 in april and edged up to 9%. my colleagues and i would now be glad to answer any questions. >> thank you very much. i wanted to start with the private sectornumbers. those inerms fortunately have been going up in the last several month i wanted to ask you just by way of review. the number for this month, the month of april we're looking at, is an increase of private sector jobs of 265,000? 268,000, i'm sorry. >> yes. >> can youive me the numbers for january, february, and march? >> sure will. the last three months it's averaged 253,000. >> but the average for the first three months of the year? >> the last three months. >> the last three months, okay. >> in the particular months

before were, total private was 231,000 in marc and 261,000 in february. >> okay. and in particular, i was just wondering if youould comment by way of your analysis on just sectors in the private -- the particular sectors within the private sector overall. what are the sectors you seeing recovering most rapidly, and where are there areas still of weakness? >> sure. the sectors showing the quickest recovery are professional and business services. we added 584,000 jobs since the labor market trough. education and health has added a little over half a million jobs. leisure and hospitality added 290,000 jobs, and manufacturing added 244,000 jobs. still struggling, financial activities actually has continued to lose jobs losing

42,000 jobs since february of 2010 and construction held pretty flat losing 9,000 jobs. the biggest declining industry is not in the private sector, but it's government. >> uh-huh. >> government's actually dropped about 391,000 jobs since june of 2009 since the recession ended. >> june of 2009. all the other numbers refer that same period? >> there was the sense the labor market trough, february 2010. i changed times on you a liability there. >> okay. we know these months, the two surveys, the household and payroll surveys, show numbers that are in conflict. just wanted to have you review that. the payroll survey shows strong growth in just overall job creation about 20000, but the

household survey shows that there were 200,000 fewer workers employed. is that typical to kind of have conflicting stories from those two surveys during a recovery? >> yeah, it's certainly not a-typical. we get some slightly mixed gnals, and the main reason is they are different surveys. there's some variation between the surveys. i do find that oer three months they do tend to become into alignment. month by month they can give a mixed signal. >> give us 30 seconds on the difference of the two surveys? >> sure. when we talk about payroll jobs, we're actually talking about a very large survey where we survey business establishments, how many people are on your payrolls. we take advantage of the unemployment insurance program because they look at the records. that's a very, very large survey, and it in fact

represents 4 million people. that's 4 million out of 130 million payroll jobs so that's -- that's what makes it that a fairly accurate number, and wh we say we gained 244,000 jobs, we're looking at that survey. >> [inaudible] >> with the household survey, that's actually a tornado telephone survey designed to give you unemployment rate, it's not designed to give you a number of employed. for example, when the household survey, you said it showed a drop of 200,000 jobs -- >> right. >> the uncertainty in that is 400,000 jobs. we're talking plus or minus 400,000 jobs when we say minus 200,000. we gain 200,000 or gained 600,000. >> i don't want to create a direct general sigh, but it's

more like polling in a sense? you got a margin of error there? >> right. it's really designed to give you the focus on the accuracy of the unemployment rate itself. for example, typically the uncertainty in the unemployment rate is two tenths of a percent. it's fairly accurate for that, but not so accurate for the levels. >> okay. just so people clear who are watching, the household survey leads to the percentage unemployment rate that we pay attention to? >> yes, that's correct. >> thank you very much. vice chair brady? >> thank you, chairman dr. hall. every month of new job growth is welcome, but this a weak recovery especially given the trillions of dollars thrown at the economy by the white house and federal reserve, and i always note that here we are after having spent all of that

federal stimulus money, d we actually have 1.8 million fewer americans working than before when all that money was spent. as for this month, usually a small jump in unemployment rate signals people moving back into the work forc that can be a good thing, but the rise in jobless claims and the jump the workers recently laid off are not signs of a healthy economy or healthy recovery. the number of unemployed who lost jobs recently increased by 242,000. this jump comes on the heels of large increases in initial unemployment claims, 474,000 which we have not seen it that high since last summer. shouldn't we be watching these statistics very carefully going forward? >> yeah, i would say

absolutely. the payroll job growth is, at least the last three months, has been acceleratedo tat's a good sign, but we have not yet seen things we would likeo see in a strengthening recovery. >> the initial jobs claim, that was a big jump. we had four weeks in a row of increasing jobless claims. that's not expected in a healthy recovery, and those who just lost their jobs recently, could these data be pointing to a weakening job market? normally it ought to be going the other direction. >> right. i would say that the number of new unemployment claims is in fact -- is in fact a helpful data, and that is a -- that rise is not a good signal. >> yeah. do you -- what do you think is

happing here? >> you know, it's hard to say. >> e numbers seem to be all over the map frankly. >> right. yeah, you know, i think while focusing on one month's data is important, you have to look back at the trend and sort of see how the trend goes. sometimes maybe at points like this you need to wait and see how the data looks over the next month or two to see if that signals anything. >> yeah, well, we've been watching over the last two years and seeing recovery much slower than 81 and 82. we have an estimated $2 trillion of capital sitting on the sideline, businesses tell us they just are reluctant to invest it in new jobs, equipment, new structures, new buildings until they see more certainty coming out of washington. i did notice -- i always

appreciate the data you gave. i did notice there was increases in leisure and hospitality this last month, but that you attributed in your marks, two two-thirds of it were related to drinking places and food service, so is the bar industr doing better these day and is that -- i'm being facetious, but there is a jump in drinking places? >> yeah, that was responsible for most of the growth in leisure and hospitality. >> i'm teasing. i'm trying to look -- we're all looking for the optimistic signs, and we see some private sector job growth that i think seems to be a good sign, but the longer term recovery which is to get more people into the work force because right now, we are at the lowest number of workers

participating in the economy in a quarter of a century so even as we look at the unemployment rate, look for hopeful signs, truth is very few people are participating or at least a lot of people are not participating in this work force, again, troubling signs as we go forward. we'll continue to watch month to month, buthis really is -- we're seeing disconcerning signs. i yield back. >> dr. burgess? >> thank you. dr. hall, just so i can be sure of it, i'm clear, in your prepared testimo you talked about gains in the mini sector, and that includes oil and gas exploration and extraction? >> yes, it does. >> and does that include both offshore and on shore?

>> yes. >> n just looking at the table a14 under the household data, under that line item of mining, corin gas, and oil and gas extraction, the unemployment rate a year ago 9.4%, april 2011, 3.5% which gives that one of the lowest unemployment rates. in fact, it rivals government workers for its low unemployment right; is that correct? >> yes. >> the -- is there a way -- i guess what's confusing me is on your testimony you said unemployment in mining increase the 11% in april. i'm assuming we're talking about oil and gas exploration and extraction in that 11,000? >> yes, that's part of it, yes. >> but, of course, we also know

that because of federal policies, we've put aot of pressure on the actual mining mining like coal mining so have -- do those two things tend to offset each other? >> well, actually this particular month both oil and gas extraction except oil and gas added jobs this month. oil and gas added 2,000 jobs. mining except oil and gas added about 2700. >> let me ask you this, do we know, what is the total universe of people employed in these industries? >> well, mining together is about 720,000 people. >> but that includes offshore and on shore exploration?

>> oil and gas extraction is 170,000 and mining otherwise is about 210,000. >> on the previous table, 813, construction and extraction occupations are lumped together. this is the employed and unemployed persons occupation not seasonally adjusted. >> yes. >> can we break those out for which -- because obviously construction, i mean, when i look a table a14 the unemployment rate for construction inpril of this year is 17.8%, almost 18% so that is the highest unemployment rate in the current jobs report is in the construction industry, and yet on able a13 it's construction and extraction are added together so like the total employed in april 2011 is 7042,

but we know the greatest unemployment -- the highest unemployment rate is in the construction industry. how might to interpret that, how am i to break that down? sort of like the total universe of people on which these construction numbers and the mining numbers are based. >> sure. well, we don't have it in this release, but we can probably break this out a bit finer for you if you'd like. >> well, i think that's helpful. we, on the policymaking side, you heard some of it referenced this morning where some people are talking about significantly increasing taxes on the oil and s industry. i don't know, maybe that's true, maybe it's not. we do seem to give a lot a way to the so-called green jobs sector. where are the green jobs on this? >> at the moment, the green --

well, first of all, depends on how you define green jobs. >> i don't know, i just hear it. that's for you smart people. >> we will at me point be measuring green jobs. we are pulling the green jobs out of the industry because ere are industries that specialize in green products that are sort of spread out throughout, and the big challenge for us is sarating them from the rest of the industries. >> right. of course, these are industries that receive huge subsidies of the stimulus bill and various other things that we've done, the cash for talkers, and i say we euphemistically, but things congress has done if the last few years. is there any way for us to get a sense on what our return on investment has been for those big -- what people call green jobs and other people call green pork? is there any way to get an idea

of return on investment there? we're talking about raising the anti on the drilling sector. i don't know, maybe that's a good thing. let's see data on that, but we should be supplied return on investment data for what has happened with the federal plus-up of these other industries. >> yeah, i certainly think with the data as it is now, one might be able to get into that to get a feel for that. that's not something we would normally do, but our data probably would educate you somewhat on that as it is right now. once we get our green job projects, pulling out the green jobs, you can get a better id of that, but that's a ways off. >> when can we expect that? >> i don't know. we're going to start collecting data next year on it, and so the problem is going to be, of course, once you start collecting data, you don't know the baseline.

you don't know -- but we'll have some idea starting next year with the number of people employed in these industries. >> the uncertainty principle, the re fact you are looking at something means you can't be certain? >> well, actually we worked hard on getting a deaf -- definition that makes since. >> very well. that will be helpful on the policy side because we ask big questions and will be great to know what the return has been on the federal investment on this activity. not complaining about it because texas has a great number of wind farms we didn't have 20 years ago, but it would be nice to know what kind of return on investment did we get from those expenditures. than you, i yield back. >> the treasury department reported the united states is expected to hit its debt ceiling on may 16th. congressional reportly reported

in anticipation of hitting the debt ceiling, today treasury stops issues state and local governments serious treasure securities that help states and local governments fund infrastructure and other projects. i find this deeply concerning because we already have seen thousands of layoffs taking place at the state and local level. you said there's a significant decrease in government jobs; is that right? >> that's correct. >> dr. hall, can you give us further detail for the committee, the current job situation throughout the state and local governments across the country, and can you offer any predictions regardg the impact of that treasury action may have on the state and local government's eloyment levels? >> sure. well, i can tell you in terms of government employment, the

government job loss has been centered primarily in local government jobs, so for example, local government, since the end of the recession continued to lose jobs something at the order of 370,000 jobs, which is a pretty high number, and there's the bulk of the government job loss since the end of the recession losing 791,000 -- 391,000, so that's not a significant number of employers. >> does your research go into whether women are dispropoion ally effected with the gornment jobs? in other words, a high number of women who are employed by government? >> yes, i don't have it in front of me, but i think we should be able to get you an idea of that. i would think especially in the local government. >> the -- you know, i netsed

that the african-american -- noticed that the african-american workers increaseed; is that right? >> yes, it did. >> what werehose figures? >> okay, sure. the african-american unemployment rate went from 15.5% to 16.1% this month, an increase of six tenths of a percent. >> do you consider that significant? >> it's not statistically significant. it's not a really large sample, so statistical significance is somewhere around 1.2 to 1.4 percentage points. >> you were answering congressman brady's question, you said we have to, and you said this in the past, is that we can't take just one snapshot of a month. we have to look at a trend and where we are, so how do you see

this, this month's numbers fitting into the trend, and did you see -- does anything here cause you to have any significant concerns that we may be going in the wrong direction? >> i would say in terms of trends, let me just say that the the -- what jumps out to me is there's three months of payroll job growth, about a quarter a million a month in private sector. >> i that significant? >> yes, that's significant, and i also think it's important in that you need about over a long time period, you need 130,000 jobs a month to employee new

people in the job force. we are getting well above the 130,000 per month jobs you need so this last three months looks to be an acceleration of the job growth. >> now, we're about to have many of our young people graduating from college, and how do you see that impacting? in oer words, when we have this month of may and june where people are coming o of high school, coming out of college looking for jobs, how does that affect your numbers during that course? in other words, is there a big pump up -- bump up in demands and therefore affects the numbers? there's been the trend i guess i'm asking you. >> you know, i think one of the things most concerning say over the past year has been the labor force not growing much. the labor force has been very flat which means we haven't had

the normal entry into the labor force on net that we normally get, and -- >> some of those people are, i guess some of the young people are staying in school longer? >> yes, that's right. >> and then we lose people that just stop looking for work? >> that's right. i would consider it to be a another face of the recovery when we start to get an increase in the labor force and people get optimistic enough and start to reenter the labor force and we get growth. it has been concerning we haven't seen much growth in the labor force yet. >> my two questions i always ask you if the president for to ask you, commissioner hall, you know, i mean, where do we go from here? what does it look like? what would you say to the president? >> you know, the good news from the report is what appears to be an acceleration in the job

payroll growth. i think kind of what i just mentioned. i think the thing that we would look forward to hopefully like we'd like to see going guard is the payroll job growth to continue and maybe accelerate and give us enough confidence that we actually see the labor force start to grow and i think that would be, like i said, i think that's sort of the next phase in the recovery. >> the next question i ask for people watching this and trying to find a job, what adviceould you give them based on geography, areas of gwth, people maybe trying to go back to school to retrain, i mean, what -- based on what we have here, what would you tell them? >> well, you know, obviously, i wouldn't -- i wouldn't guide myself by monthly report because this changes over time. >> let's talk about trends, the trends you see.

>> sure. the trends are we continue to see growth in the service provider sector in particular. that sector historically is more recession proof than other sectors. this recession is deep and bad enough that it really has lost jobs, but as a general rule, that sector does better than other sectors, and, you know, within that there's lots of occupations likely to have strong growth over the next 10 years. >> like health? >> health care to financial examiners to computer software engineers, a number of things like that. >> right. thank you very much, mr. chairman. >> moving to a second round, doctor. the chart is up, sorry, i wanted to go through the chart for a second. what's striking about this chart is it obviously depicts private

payroll starting with the month of january of 2008 and it goes through this report that we're looking at now, april of 2011. what's stunning about that chart obviously is you got over, you got over the course of the last year, the month by month number, last year one administration into the other, but for a long, long period of time you have negative numbers on private sector job growth. obviously starting, and i want to make sure i'm reading this right, my staff can correct me. when we go into positive territory, it's what month? >> i believe it was march. >> march of? >> march of 2010. >> 2010, okay. is there any way that you can -- i don't know if you have the number calculated or if you can get it to us, the total growth -- the total private

sector job growth of that date from march of 2010 through april 2011 -- >> 2.9 million. >> jobs created since march of 2010 through this month? >> yes. >> okay. i thought that was significant, and i never thought of it in terms of it over that court of time. ..

>> our common denominator in terms of what type of work or what challenges they face. that's question one. question to is, is there any significance they face of that decline or is that more of, more of a standard number we have been seeing? >> sure. first of all, the very large number of long-term unemployed, the rise has been very broad. so amost all demographic groups, almost all industries have had a big rise in the long-term unemployed. but ere's an over representation in that, for example, for those with less than a high school diploma, they are very much over represented. the unemployment rate is like a six-point deficit of the long-term unemployed for those without a high school diploma.

those who were either never married or widowed, divorced or separated they are over represented in the long-term unemployed. and in industries, construction stands out as having a very large, larger than expected share of the long-term unemployed. that never gng to a little bit is not uncommon, but the thing that is tricky about that is, people can drop out of being long-term unemployed by just leaving the labor force or by getting a job. the way it is looking right now, to be believe labor force for everyone to get a job out of the long-term unemployed, 27 weeks or longer. >> one of the most compelling pieces of data you just cited is that that refers to education levels.

so in other words, if you have a high school diploma or less, i'm just trying to put a number on that. in terms of the likely you being not just unemployed, not being part of the long-term unemploy unemployed. >> you're probably, you are three times more likely to be long-term unemployed than someone with a college degree. >> thank you. dr. burgess, do you have anymore? >> thank you, dr. hall. if i correctly interpreted your answer to mr. cummings questions about geographically and which sector of the economy, if someone was really serious about tting a job right now, they would move to texas and practice medicine, is that right? >> if you have that option, it's not a bad what. >> let me ask another question. we deal with nonfarm payroll, is that correct? but there's going be in

effect from what is happening in the central part of this country, kind of gets, kind of get obscured and headlines of all the other news, but there is a huge issue with flying of the farmland in central part of the estate, boarding the mississippi river. do you have an idea how that is gog to affect things? as we see missouri, arkansas, memphis, tennessee. they said water is up to the sidewalks. what sort of effect will that have or is that just built into sort of baked in the process, baked into the cake where we can have a tough agricultural year? >> first of all, we don't collect data on farm employment. the department of agriculture does, i believe. they p a fair amount of attention to data on employment on farm so i'm probably not the right one to ask. >> if those jobs are not there during the growing season, certainly may not be in the fields are underwater, then that ll push people into looking for work in other sectors, is that correct?

there's bound to be a ripple effect, no pun inteed? >> what would happen is it would not come probably not shot in our papal jobs numbers, it could well show up in our unemployment numbers. accounts are two different surveys and the coverage is like a different. with the unemployment rate, we are making phone calls and that will catch some of tose jobs with a phone calls, but with a payroll jobs, we're only talking talking to nonfarm establishments that pay payroll taxes basically. >> again, it's an enormous tragedy and a story that is sort of not, below the radar screen for most americans. i'm told by people who live there, it's a flood of the proportions of 1927, 1928, when fully 1% of the usable housing stock in the united states of america ended up under water. it's a similar sort of circumstance today. so i can't help but feel that's good to have a profound effect

on whatever fragile recovery we're experiencing now. this is going to take a toll. do you have a sense as have the actual size of the labor force itself, the behavior of that, duringhat has been this very prolonged recession, i mean, it seems like the number of the sort of total side of the labor force ismaller today than what we used to talk about. >> that's right. the labor force participation rate literally gives you some idea. and e labor force participation rate is at a very low level. so i think statistics that were up there a minute ago, it's the lowest level since the '80s at some point your so that is a concern. >> we talk about all the trouble having with the deficit and what have you come and need to get people back to the workforce and paying taxes. it's going to be harder to do that, isn't it? >> yes.

>> thank you, mr. chairman. i will yield back the balance of my time. >> yankee doctor. commissioner, we're going to let you go in imola. one question i want to ask earlier with regard to japan, and, in fact, that that is having on r economy. i know it's not an easy question to answer, but both of the tsunami and earthquake, and whether or not there's an impact, some indication or at least probably speculation is probably a better word, that they could be an impact may be in our manufacturing. i guess told that yesterday's unemployment insurance claims data showed that 1700 employees who filed claims after being laid off from auto manufacturers in ohio. any data that suggests that that could be related to what's happening in japan? and then secondarily, more

broadly, is any data that indicates a broader impact from what's happened in japan's? >> sure. as i understand it, there have been some very short-term plant closings related to this, like when they are et cetera. and since the workers were employed most of the time, just having one day plant closing doesn't show up as a payroll job loss. it will lower our hours worked a little bit, but not really affect the payroll jobs. yet, my expectation would be if it's going to have an impact on the payroll jobs, in particular, that would likely start next month and we will get, see what we can see in the employment numbers in the automobile plants next month to see if there's maybe and affect happy. >> okay. doctor four, we are grateful to have you here again.

this hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]