Low prices, weak hiring raise odds of Fed action

Source: AP-Excite

By CHRISTOPHER S. RUGABER

WASHINGTON (AP) - The U.S. job market is flagging, and consumer prices are barely rising. The picture sketched by data released Thursday has made some economists predict the Federal Reserve will announce some new step next week to boost the economy.

Applications for unemployment benefits rose last week, pointing to a fourth straight month of sluggish hiring in June. And consumer prices were pulled down in May by a plunge in gas prices.

Weak job growth raises pressure on the Fed because part of its mission is to boost employment. And mild inflation gives policymakers more leeway to act. If inflation were threatening to accelerate, Fed policymakers might feel compelled to raise interest rates.

Fed officials are "likely to go into that meeting feeling a little chastened and looking for a way to support the economy," said Jeremy Lawson, an economist at BNP Paribas.

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In this Wednesday, June 13, 2012, Tammy Syniec, right, reads the list of employers participating at a job fair expo in Anaheim, Calif. More Americans sought unemployment aid last week, suggesting hiring remains sluggish. The Labor Department said Thursday June 14, 2012 that weekly unemployment benefit applications rose 6,000 to a seasonally adjusted 386,000, an increase from an upwardly revised 380,000 the previous week. (AP Photo/Jae C. Hong)