Press TV has interviewed Mark Thornton, senior fellow at the Ludwig von Mises Institute in Alabama, to discuss a report by the US Labor Department saying the economy added the fewest number of jobs in seven months in April.
The following is a rough transcription of the interview.
Press TV: What has gone wrong with the US economy?
Thornton: Well the unemployment report today is very disturbing. The number came in 160,000 new jobs all of which are accounted for in the service sector and all the other sectors of the American economy are negative in terms of job growth or very disappointing.
So you are looking at construction, mining, oil, manufacturing, all of the core jobs are either stagnant or declining and so that is a very disturbing report and previous months were also revised downward and the number of people who are actually engaged in the labor force also declined. So in every aspect this was a very disturbing report.
Press TV: So what do you think the Federal Reserve will do and should do?
Thornton: Well what I think they should do is to allow market to determine rates or to raise rates along their guidelines but what this report is likely to do is to delay any increase in interest rates in the US economy.
The Fed is already very dovish in terms of their willingness to raise rates especially Janet Yellen, she has a long history of promoting low interest rates in the economy which is bad for the economy and it creates bad investments in the economy because people do not have to pay interest in order to make those investments and so this is going to delay and forestall the policy moves from the Fed that they said they were going to do in 2016 but now are much, much less likely.
Press TV: And obviously the economy has a big impact on the political atmosphere in the country, I would imagine. So who do you think has the better policies, if I may, throw that general question out at you?
Thornton: Wow, they have all got really bad policies. Bernie Sanders is a socialist ... Hillary Clinton is practically a socialist and has a long history of policy failures and so that leaves Donald Trump and Donald Trump has said a lot of different things, you are never sure exactly what he is going to do and he has made a lot of protectionist types of claims against international trade but I guess he is the only one who does not have a bad record already and so the Federal Reserve is unlikely to raise interest rates to create economic trouble as we go into election season.
So any interest rate hype is probably going to come after the election but it is going to be a chaotic ride to the election in November here in the United States for sure.
Press TV: And just as another general question, if I may, looking to the future then is this upheaval that we are seeing every few months at least take place in the US economy, is this going to end sooner or do you think that this will continue for the short-term at least?
Thornton: My expectations are that this is a sign of weak first quarter in the US economy, a bad start to the second quarter in the US economy, it is my expectations that the economy is going to gradually decline as we go through 2016 and then after the election the Federal Reserve probably will act and we will see more of a precipitous decline in the US and that just is in marching step with other economies around the world such as Japan, China, Russia, Europe, Canada. So we are relatively strong but I think we are going to enter the course of a global recession as we close out 2016.