John Silvia, Wells Fargo Chief Economist & Wake Forest Instructor Talks Jobs on Bloomberg Show

Workers Must Lower Expectations on U.S. Jobs, Wells Fargo Says: Tom Keene

Reposted from Bloomberg.com | By John Detrixhe and Tom Keene – May 19, 2011

Workers have to accept a “lower level of expectations” for employment amid tepid economic growth and may need to retrain and move to find opportunities, said John Silvia, Wells Fargo Securities LLC’s chief economist.

The bank forecasts U.S. gross domestic product will grow at 2 percent in the second quarter, compared with a median estimate of 3.3 percent by 71 economists in a Bloomberg survey. GDP cooled to 1.8 percent in the first quarter, compared with 3.1 percent from October through December, the Commerce Department said on April 28.

“We’ve got economic growth, just not as strong as many people had hoped for or expected,” Silvia said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewittt in the studio in New York.

The U.S. unemployment rate has stayed above 8.5 percent since March 2009, even as payrolls climbed for the past seven consecutive months.

“The patterns are very, very different than the past,” Charlotte, North Carolina-based Silvia said. “For many people that means retraining, moving when they can, it means searching out new opportunities.”

Housing has yet to recover from a five-year slump after prices peaked in 2006, according to the S&P/Case-Shiller Composite-20 Home Price Index. That’s impeding workers’ flexibility in finding job opportunities, Silvia said.

Growth Bets
The gap between yields on two- and 10-year Treasuries has widened for two days, reaching 2.65 percentage points today. The so-called yield curve flattened to 2.58 percent on May 5, the narrowest since Dec. 6. A steeper yield curve typically signals that investors anticipate economic growth to increase.

Jobless claims dropped by 29,000 to 409,000 last week, Labor Department figures showed today. The median estimate of economists in a Bloomberg News survey called for a decline to 420,000.

“With jobless claims coming down, it suggests that we are perhaps correcting the second-quarter weakness, looking for stronger economic growth in the second half of the year,” Silvia said.

To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net.