The Federal Reserve chairman, in testimony before the Joint Economic Committee of Congress on Wednesday, suggested that ending the nation’s long-term unemployment crisis would be a more effective way of shrinking government deficits and debt than the austerity cocktail funneled down our throats by Congress and the White House in recent years.
“The loss of output and earnings associated with high unemployment … reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur,” Bernanke said.
Instead of doing anything about unemployment, which hovers at 7.5 percent four years after the end of the Great Recession, Congress and the White House have spent the past two years finding diabolically creative new ways to slash government spending. That has worsened the unemployment crisis, making Bernanke’s job harder.
Chosen excerpts by Job Market Monitor
The decision was a testament to what former colleagues call Evans’s ability to build consensus. It also shows how one of the Fed’s 12 regional bank presidents can influence policy that is usually made by the central bank’s Washington-based board of governors, led by Bernanke. “Through the power of his ideas and his powers of … Continue reading »
the Federal Reserve Act calls for ‘maximum employment’, not ‘minimum unemployment’. This distinction did not matter much in the past, but it is becoming increasingly important. The ‘participation gap’ remains as big a drag on growth as ‘unemployment’ and we, like Goldman, would expect the Fed to ‘change’ its target for their outcome-based guidance (to … Continue reading »
The Federal Reserve’s is expected to extend its easing measures until the job market improves “substantially”, the stated goal is a decline of the unemployment rate to 6.5%. One can use the unemployment rate model to provide an estimate of the future unemployment rate (UER). This model suggests that the unemployment rate will decline to … Continue reading »
Aggressive policy easing will remain necessary for the simple reason that levels of both U.S. unemployment and inflation are not where the Federal Reserve wants them to be, a top U.S. central bank official said on Tuesday. In a textbook argument that appeared to push back at some of his more hawkish peers, Boston Fed … Continue reading »
Job Market Monitor : Last week, the FED said that it will continue to stimulate growth until the unemployment rate falls to 6.5 percent or the inflation rate reaches 2.5 percent. The Fed said it did not expect unemployment to reach that benchmark until 2015. The Brooking Institute takes a look at it. *-* The … Continue reading »
The Federal Reserve predicts it will keep stimulative policies in place until the unemployment rate falls to 6.5%. But just how many jobs will it take to get there? As of November, the unemployment rate was 7.7%. In order to drop to 6.5% immediately, it would require 1.9 million jobs to be created right now. … Continue reading »
Dallas Fed President Richard Fisher, a top Federal Reserve official, said on Tuesday that his main concern now was unemployment, not inflation. He said another option the Fed might consider to signal its aims to markets was a target for unemployment, although this would be difficult because monetary policy alone was not responsible for creating jobs. … Continue reading »
Federal Reserve Bank of Atlanta President Dennis Lockhart said forceful central bank policies will remain needed to spur job growth even if Congress averts sudden tax increases and spending cuts at the end of the year. “I expect that continued aggressive use of balance sheet monetary tools will be appropriate and justified by economic conditions … Continue reading »
Federal Reserve Vice Chairman Janet Yellen backed a proposal to link the Fed’s zero interest-rate policy to progress toward meeting its goals for inflation and employment rather than to a calendar date. “The Committee might eliminate the calendar date entirely and replace it with guidance on the economic conditions that would need to prevail before … Continue reading »
Each month, The Hamilton Project examines the “jobs gap,” which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while absorbing the people who enter the labor force each month. As of September, our nation faces a gap of 11.1 million jobs, but the … Continue reading »
We face a 9 million jobs gap between the number of jobs we have and the number we need, and this doesn’t even address the low quality of the jobs being created. The chart below, taken from an Economic Policy Institute blog post, illustrates the gap. As Heidi Shierholz, the author of the post, explains: The … Continue reading »
The labor market has added nearly 5 million jobs since the post-Great Recession low in Feb. 2010. Because of the historic job loss of the Great Recession, however, the labor market still has 3.8 million fewer jobs than it had before the recession began in Dec. 2007. Furthermore, because the potential labor force grows as … Continue reading »
” The recovery is real, but it’s still really far from the recovery we need” writes Matthew O’Brien in The Scariest Jobs Chart, Private Sector Edition. (Choosen excerpts by JMM to follow) That’s been the consistent message of the past three years, with consistent job growth that hasn’t been near enough to end our jobs crisis much … Continue reading »
Fiscal policy, at both the federal and state and local levels: headwinds for unemployment reduction says Bernanke
The accommodative monetary policies I have reviewed today, both traditional and nontraditional, have provided important support to the economic recovery while helping to maintain price stability… Notwithstanding these positive signs, the economic situation is obviously far from satisfactory… Further, the rate of improvement in the labor market has been painfully slow. I have noted on …Continue reading »