Studies by regional Federal Reserve banks show job scarcity is a major hindrance to the recovery of the depressed U.S. housing market, a top Fed official said on Tuesday.
Fed Governor Elizabeth Duke said regional Fed banks have begun collecting data from surveys in a more systematic way. Officials at the central bank hope the results will play a greater role in making decisions about monetary policy, she said.
The lack of jobs was the dominant theme in the first year of data collection, with the majority of respondents identifying unemployment as the primary cause of new distress in the housing sector, Duke said.
The Fed governor cited one participant in a San Francisco Fed survey, who said prolonged unemployment and underemployment are causing a surge in the number of low-and moderate-income individuals and communities.
Unemployment is now the driving force behind most of the other crises we are facing. the respondent told the Fed.
However, Duke said conditions for small businesses, who make up the bulk of U.S. hiring, are improving.
The combination of a variety of recent survey results paints a picture of increasing optimism about future sales and business conditions and a corresponding easing of credit availability for small businesses, Duke said in a speech in St. Louis on community development. A copy of her speech was made available in Washington.
Fed officials are wrestling with when to remove their extensive support for the economy as the recovery gains speed.
While some policy-makers are worried that the central bank could fail to keep inflation in check if it delays tightening financial conditions, the Fed has said it is in no hurry to raise interest rates or sell bonds while unemployment is high.
U.S. companies created jobs at the fastest pace in five years in April, pointing to underlying strength in the economy, although the jobless rate -- which is derived from a separate survey rose -- to 9.0 percent on a modest rise in the size of the labor force.
( Reporting by Mark Felsenthal, Editing by W Simon )