Nicholas Economides, NYU Stern School of Business Economics Professor joins the Yahoo Finance Live panel to discuss the Feb. Jobs report.

Video Transcript

ZACK GUZMAN: Let's shift over to kind of the underlying numbers that we got in relation to the way that the economy here is rebounding. Of course, it hasn't been spread equally across different groups. We've been talking about the huge surge in leisure and hospitality jobs in this report.

But specifically also, we got the updates on the racial front of unemployment rates. And interesting to see the Asian unemployment rate dip below that of white Americans. We've been talking also about the relative higher unemployment rates among Black and Hispanic Americans. That was also included in this report. And it might kind of touch on some of those points that we've heard from Fed Chair Jerome Powell talking about wanting to remain lower for longer, and really building that bridge for all Americans that were impacted by this.

And for more on that, I want to bring on our next guest to kind of chat that through with us. Again, very tricky times here for Fed Chair Powell. Joining us now on the phone is Nicholas Economides, NYU Stern School of Business Economics Professor. And Professor Economides, appreciate you coming back on here. I mean, what's your take from this report? What jumped out at you to kind of get a clue on where we're at in this recovery?

NICHOLAS ECONOMIDES: I think the recovery is progressing well. That's important. It's not at the top speed, but still it's progressing very well.

I think we should also point out that the vaccinations are going very well. We have about 25% of the population vaccinated. And at the present pace, in a month we'll have 18% more. So it's very likely that a month from now, we will see not so many people admitted in hospital, practically no people dying. And therefore, you will see the politicians be much more open to opening the remaining parts of the economy. So I expect the recovery is going to go very well.

At the same time, I would say that the market is overreacting to high yields. The way that the Fed has behaved for the last 12 years, it's very possible that it can keep purchasing more securities and mortgages, and therefore bring the rates significantly lower. So I wouldn't worry so much as the market does about the high yields.

But I think today's report is very good news. The reports on vaccination are also very good news. So I expect the recovery to happen faster than most people expect.

AKIKO FUJITA: Professor, Zack just pointed to the uneven recovery that we're seeing. If you look at specific demographics, the Black unemployment rate certainly a significant one to point to, because it actually went up from 9.2% to 9.9%. Of course, women also a big concern in terms of the impact they have had to endure as a result of the pandemic. When you think about the numbers we got today, what does that tell you about the long-term scars that are likely to remain even after the economy opens up in a significant way because of vaccinations?

NICHOLAS ECONOMIDES: Well, I think that there are some sectors which have been hard hit. For example, restaurants, entertainment, transportation. These are hard hit sectors. And some of the businesses are going to close forever in those sectors, and there is going to be the resulting unemployment. So I don't think we're going to get away with full employment, let's say where we were about 13 or 14 months ago. We are not going to get there very easily.

At the same time, I'm generally confident even as old businesses close, new businesses open. And there is an endurance of the high tech sector and tools that allowed us to stay connected, like right now. So there is an endurance of old stuff and expansion of those sectors.

I think that the sectors that I would expect that are going to do very well in the next six months would be the transportation and entertainment and restaurant type of sector, I mean like restaurants type of sectors.

AKIKO FUJITA: But professor, can you speak specifically to that divide that we're seeing in certain groups, whether it's Black and Hispanic unemployment? And again, it's worth noting-- while we got the unemployment rate actually came down, unemployment rate for Black Americans went up. The concerns around women. I mean, when you talk about specific demographics, not sectors, how should we be looking at that growing divide?

NICHOLAS ECONOMIDES: Well, I wouldn't be worried about one month's numbers about the growing divide. Women participate in almost all parts of employment. So I wouldn't say that there is a significant signal from the present numbers. Similarly, I think that Hispanic, African-American unemployment will recover much faster than expected as the restaurant sector, the entertainment sector, and the transportation sector reopen.

ZACK GUZMAN: And as we talk about the tools the Fed has to kind of try and approach this, I mean, it would seem-- it sounds like you're saying the moves we're seeing in the market are overblown. But when it comes to the expectations moving forward, what would you say is kind of the best path to really address rising inflation expectations and that tricky piece of communicating it appropriately in terms of what the Fed might look to do? Because we're going to be breaking down later on the show, yield curve control is an option the Fed's been looking at.

But what's your take on maybe what Jay Powell needs to say at this moment? And maybe he doesn't need to say anything at all.

NICHOLAS ECONOMIDES: Well, I think the best way for the Fed to communicate is to have a model that is publicized so everybody knows what we're talking about and what path we're on. Now we are kind of hanging from his words every time he speaks, and that's a problem. I mean, saying the wrong word can really throw off the market.

But in my opinion, especially because the amount of borrowing of the US government has skyrocketed-- and will skyrocket-- there is a management issue of interest rates from the point of view of the federal government. The federal government has an incentive to keep interest rates low-- not only in the short term interest rates, but even long term interest rates low so that they will not pay so much money on its debt. So I would expect for a significant period of time-- five years, 10 years-- that we're going to keep seeing low interest rates, because it fits the financial interests of the Fed and the US government.

AKIKO FUJITA: Professor Nicholas Economides, NYU Stern School of Business. It's good to talk to you. Really appreciate your insight today.