The last, crucial piece of the US economic recovery puzzle -- a turnaround in the sluggish job market -- is still missing and that's reason enough for the Federal Reserve to keep short-term interest rates near rock-bottom levels through much or all of this year.
A report this month showing slow job growth in February raised the odds that Fed policy-makers will wait even longer than economists previously thought to begin to nudge up short-term rates.
"Payroll growth has been sluggish. That's the nail in the coffin for no rate hike move," said Richard Yamarone, economist with Argus Research Corp. He believes the Fed will hold rates at currently low levels through this year and into next year.
The US economy added a paltry 21,000 jobs last month -- all of them in government. Private payrolls were flat.
There were some 8.2 million people unemployed in February, with the average duration of 20.3 weeks without work. That marked the highest average duration of joblessness in over 20 years.
Job growth has been stubbornly slow despite recent improvements in economic activity.
The US economy, after struggling to get back on its feet after the 2001 recession and Sept. 11 terrorist attacks, finally snapped out of a funk in the second half of last year, growing at its strongest pace since early 1984. The economy is expected to grow at a healthy rate of more than 4.5 percent in the first half of this year, economists predict.
Since US President George W. Bush took office in January 2001, the economy has lost 2.2 million jobs.
Although companies are generally feeling better about the economy, they are still cautious about hiring. Productivity gains also have allowed companies to produce more with fewer people, economists said.
With inflation under wraps even as the economy has registered solid growth, Fed policy-makers have leeway to hold interest rates steady, economists said.
Economists widely expected Fed Chairman Alan Greenspan and his Federal Open Market Committee colleagues to keep the federal funds rate at a 45-year low of 1 percent at the end of their meeting yesterday.
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