JUDY WOODRUFF: The latest jobs report, as you heard, shows the economy seems to keep building better momentum than expected. Still, more jobs is not the same thing as rising wages. And that continuing problem in the labor market leaves a big dilemma: When’s the right time for the Federal Reserve Bank to pull back further on its efforts to boost the economy?
Our economics correspondent, Paul Solman, talked to a leading player in all of this, part of his reporting on Making Sense of financial news.
PAUL SOLMAN: Capping off the best year of job growth since 1999, the economy added just over a quarter-million jobs in December, helping push the official unemployment rate down to 5.6 percent.
The numbers validated our having asked a key Federal Reserve official earlier in the week the quintessential policy question: Should the Fed restrain growth before it show any signs of getting out of hand?
So when — when will you start raising rates?
PAUL SOLMAN: That’s the question everybody like me asks that people like you never answer, right?
JOHN C. WILLIAMS, President, Federal Reserve Bank of San Francisco: You know, the answer is, it is going to depend on the data.
PAUL SOLMAN: John Williams has good reason to diplomatically dodge. He’s president of the Federal Reserve Bank of San Francisco, Fed Chair Janet Yellen’s old job, and his take on interest rates can move markets, since he now gets to vote on rates at Fed meetings.
We spoke to him this week at the annual economics convention, where he gave a talk on the Fed’s dual mandate, keeping inflation low, while increasing employment and hopefully creating jobs.
MERLE HAZARD, Musician (singing): It’s awfully hard to be a central banker.
PAUL SOLMAN: Economics country crooner Merle Hazard debuted an explanation on the NewsHour recently and performed it at the convention.
As he playfully puts it:
MERLE HAZARD (singing): I have got a dual mandate, dual mandate. I got to keep prices stable, while giving jobs to those who are able.
PAUL SOLMAN: Now, Fed officials usually fall into one of two avian camps, hawks, keeping a keen eye on inflation, and ready to lift interest rates to contain growth and hold prices steady, and doves, who’d prefer to keep rates low to further spur consumer and business spending, in hopes of creating new jobs.
You’re a dove, right, because you’re more reluctant to raise rates than to keep them low, no?
JOHN C. WILLIAMS: No, I think that I wouldn’t agree with that characterization.
I am worried about the fact there’s still a lot of people out of work. I also take very seriously our mandate to have low and stable inflation. so I don’t think that’s dovish or hawkish. I think that’s just doing what we’re supposed to be doing.
PAUL SOLMAN: Well, then, maybe John Williams is a quail, the state bird of California.
But, in any case, he’s not as dovish as Fed Chair Yellen who, in October, to the dismay of inflation hawks, was photo-opped with a group of long-term unemployed, signaling her sympathies.
Do you think Chairperson Yellen went a little overboard by having a photo-op with the unemployed?
JOHN C. WILLIAMS: Absolutely not. Let’s remember, there are still a significant number of people who either, A, are unemployed or, B, are only working part-time, and they would like to work full-time, but the jobs just aren’t available, and there’s a lot of people out there who’ve given up looking for jobs.
PAUL SOLMAN: In fact, our own monthly reckoning of un- and under-employment, accessible on our online Making Sense page, is still well above 13 percent, nearly 22 million Americans who say they want a full-time job, but can’t find one.
So the obvious question to Williams:
Do you think that the labor market may be weaker than it actually looks on paper?
JOHN C. WILLIAMS: So, sure, I think, yes. The answer to that is yes. I think the unemployment rate might be sending a little bit rosier signal on that progress so far.
PAUL SOLMAN: So how does this voting Fed member react to apparently rosy numbers like this morning’s?
JOHN C. WILLIAMS: There’s nothing in one employment report that would fundamentally change my view, but I will be looking for continued signs of improvement in the labor market and continued signs of some increases in wage growth.
PAUL SOLMAN: In December, it turns out, the signs were mixed, yes, considerable improvement in the labor market. On the other hand, wage growth actually reversed, contracting by 5 cents an hour and wiping out last month’s hopeful wage gain.
But back to the trillion-dollar question, which anyone with a loan, or wanting one, and any investor would ask: When will the Federal Reserve’s Open Market Committee finally raise the essentially zero short-term interest rate?
JOHN C. WILLIAMS: The vast majority of the committee participants viewed 2015 as the time of the first rate increase.
PAUL SOLMAN: It’s 2015 now.
JOHN C. WILLIAMS: It is. My own view is that around the middle of this year will be the time when, based on my forecast, it would make sense to really start seriously weighing, should we raise rates at this meeting or should we wait a little longer?
PAUL SOLMAN: When you have conversations in the Open Market Committee meeting, where you’re deciding whether or not to raise interest rates, how political is it?
JOHN C. WILLIAMS: It’s absolutely not political.
I mean, the only two topics that I can think of that we spend significant amount of time are the economy and monetary policy and — and sports.
PAUL SOLMAN: And sports, presumably, because San Francisco does so well?
JOHN C. WILLIAMS: Yes. Apparently, I talk mostly about sports when we win, but…
PAUL SOLMAN: Well, the 49ers didn’t do that well, so…
JOHN C. WILLIAMS: Thanks for reminding me.
PAUL SOLMAN: And, so, from the annual meeting of the world’s economists in Boston, this is Paul Solman reporting for the PBS NewsHour, while rooting for the New England Patriots this weekend.