Bernanke Unshaken By Bad Economic News
Fed Chairman Says High Unemployment, Skyrocketing Gas Prices Belie The Economy's Strength
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Despite a recent spike in the unemployment rate, the danger that the U.S. economy has fallen into a "substantial downturn" appears to have waned, Federal Reserve Chairman Ben Bernanke said. (CBS)
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Federal Reserve Chairman Ben Bernanke testified that an impending recession is possible. And struggling homeowners could soon be getting some help. Alexis Christoforous reports.
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Bernanke Grim On Economy
Speaking on Capitol Hill, Federal Reserve Chairman Ben Bernanke didn't use the word "recession" but still issued a gloomy prognosis for the economy. Alexis Christoforous reports.
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Federal Reserve Chairman Ben Bernanke says that interest rates may be raised amidst a sluggish economy and consumer fears over record-breaking gas prices. Pauline Chiou reports from New York.
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Addressing a Fed conference in Chatham, Massachusetts, on Monday night, Bernanke said a government report last week showing the unemployment rate rising from 5 percent in April to 5.5 percent in May - the biggest one-month jump in two decades - was "unwelcome." However, the Fed chief said other forces should "provide some offset to the headwinds that still face the economy."
The Fed's powerful doses of interest rate cuts, the government's $168 billion stimulus package, further progress in the repair of problems in financial and credit markets, a gradual ebbing of the drag from the deep housing slump and still solid demand from abroad for U.S. exports should help the economy over the remainder of this year, he said.
Although economic activity is "likely to be weak" during the current April-to-June quarter, Bernanke said "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so."
Last Friday fears were rekindled that the country could be headed for a deep recession after the unemployment rate zoomed and oil prices registered their biggest single-day leap.
However, Bernanke said, "Recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly."
Still, soaring energy prices are a double-edged sword for the country. Oil prices closed Monday at $134.35 a barrel, down from last week's high of $139.12 a barrel. They risk putting a further damper on growth as well as spreading inflation through the economy, Bernanke said.
"Inflation has remained high," largely reflecting sharp increases in the prices of globally traded commodities, Bernanke said. "The latest round of increases in energy prices has added to the upside risks to inflation and inflation expectations," he said.
The Fed is paying close attention to the extent to which consumers, investors and businesses believe prices will rise in the future, he said. If consumers, investors and businesses believe inflation will continue to go up, they will change their behavior in ways that aggravate inflation, turning it into a self-fulfilling prophecy.
The Fed "will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation," Bernanke said.
Bernanke spoke Monday evening to a conference on understanding inflation and the implications for Fed policymakers in setting interest rates. The forum was sponsored by the Federal Reserve Bank of Boston. His comments on the economy's outlook were fairly brief and were part of a larger, mostly academic speech.
Last week, Bernanke sent his strongest signal yet that the Fed's rate-cutting campaign was probably over for now because of growing concerns that soaring oil and other commodity prices - along with a weakened dollar - are aggravating inflation.
To help brace the economy, the Fed dropped rates in late April to 2 percent, a nearly four-year low, continuing a rate-cutting campaign that started last September.
Many economists believe the Fed will hold rates steady at its next meeting on June 24-25 and probably through much, if not all, of this year. However, some believe inflation could flare up and force the Fed to begin boosting rates later this year or next year.
Inflation forecasting is important to Fed policymakers when determining the best course on interest rates. Even with extensive research over the years, much remains to be learned about both inflation forecasting and inflation control, Bernanke said. And there are areas where additional research could prove helpful.
Policymakers and analysts often have relied on information from commodity futures markets to help shape inflation forecasts, Bernanke said. In recent years, though, information from futures markets has "underpredicted commodity price increases ... leading to corresponding underpredictions of overall inflation," he said. The "poor recent record" on that front raises the question of whether policymakers should continue to use this source of information and, if so, how, Bernanke said.
Despite the recent record, Bernanke said he didn't think it was reasonable to ignore information about supply and demand culled by futures markets. However, it does seem reasonable, he said, to treat such information as highly uncertain.
Working to make economic data timelier and more accurate also would be useful to policymakers trying to divine inflation's direction. Moreover, it would also be helpful for policymakers to know more about how people's inflation expectations are influenced by Fed interest rate actions, Fed communications and economic developments such as oil price shocks.
"Much evidence suggests that expectations have become better anchored than they were a few decades ago, but that they nonetheless remain imperfectly anchored," Bernanke said.
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See all 96 CommentsProof of this is that he''s NEVER been correct about ANYTHING yet---and HE''S just not that dumb!
If you make any decisions based on what he says, you''re screvved! Fortunately, when Bush''s administration is over, hopefully the next president will appoint a new Fed chief! There''s gotta be more capable people out there than Bernanke!
Did he have his fingers crossed behind his back when he said it?
...has been known to manipulate and lie about data... of various types throughout history.
It is then, a foregone conclusion that our government... in its current form... pressures the "economists" and then manipulates the data they put out, to ensure that the real news of the economy in the U.S. is never realized or known (for their own political gain and future). So, therefore, the REAL news/data is never really known among the American populace... UNLESS...
...you happen to be in the economic group of 95% of the population... and have an IQ above room temperature, where not only do you understand the REALITY of the economy... but you are living it and dealing with it every day!
Thanks to the FED nobody in the investment world now wants anything to do with all our worthless dollars floating around out there.
Thanks a lot you idiot.
to have rights from goverment. Just read it on the web
its right there. It blows me away what you have put up with America. Wake up to Dr Paul and take this country back.
Bernanke has been the Stock Market''s Bi tch ever since he got in there. (OH OH Bear Stearns- OH OH help make more money available, Woo Woo).
The only thing surprising is that the Fed loan interest rates haven''t gone negative, "cause this fella is in the stock market''s pocket.
Bernanke is more concerned about his boss being impeached - Dennis Kucinich is going after Bu$h this week...
Addressing a Fed conference in Chatham, Massachusetts, on Monday night, Bernanke said a government report last week showing the unemployment rate rising from 5 percent in April to 5.5 percent in May - the biggest one-month jump in two decades - was "unwelcome." However, the Fed chief said other forces should "provide some offset to the headwinds that still face the economy."
Give me three of whatever Old Ben''s Smokin''.....
Bernanke must have worked PR for a bush-league chamber of commerce, for this is a clear exercise in "Let''s Not Panic, Folks!"
Unemployment has not improved, the housing sector is flat, and now-- just in time to do its patriotic duty-- the Big Oil majors arrive to raise the cost of living.
Bernanke should be waving his fist angrily at the mortgage bankers for their unregulated greed, dashing the hopes of millions of homeowners and sending economic shockwaves through the economy.
Bernanke should be shouting in outrage that a few oil companies dare to plunder the wallets of America, simply because they know Bush will not interfere with a robbery-in-progress.
And Bernanke should go before congress to demand repeal of the GOP-brokered subsidy from US taxpayers. Few taxpayers, in fact, even realize the billions in subsidy is there!
Instead, Bernanke grows a beard, and goes into Zen-like statements which serve no purpose but obfuscation. That, apparently, is the entire purpose.
Bernanke must have worked PR for a bush-league chamber of commerce, for this is a clear exercise in "Let''''s Not Panic, Folks!"
Unemployment has spiked, the housing sector is flat, and now-- just in time to do its patriotic duty-- the Big Oil majors arrive to raise the cost of living.
Bernanke should be waving his fist angrily at the mortgage bankers for their unregulated greed, dashing the hopes of millions of homeowners and sending economic shockwaves through the economy.
Bernanke should be shouting in outrage that a few oil companies dare to plunder the wallets of America, simply because they know Bush will not interfere with a robbery-in-progress.
And Bernanke should go before congress to demand repeal of the GOP-brokered subsidy to Big Oil from US taxpayers. Few taxpayers, in fact, even realize the billions in subsidy is there!
Instead, Bernanke grows a beard, and goes into Zen-like statements which serve no purpose but obfuscation. Deceit, apparently, is the entire purpose.
As a government appointee... do you have to be mindful of your actions?... NO!
As a government appointee... do you have to care about the results of your actions?... NO!
Why?
Because in the highest levels of the Federal government no matter what happens, even in the worst case scenario (nuclear WW3), these government appointees will merely be SHELTERED from all that crumbles around them...
...including the entire country!
It will be an epic battle of the third
dimention kind, THE PHYSICAL AGAINST THE PSYCHE !!!
I can hear the grunting and groaning
of a great tug of war ;
I EXPECT HIGHER!! / NO NO I SAY !!
YES! HIGHER!! / NO WAY !!
ANCHORS AWAY !! / NO! STEADY AS SHE GOES!!
And "UNDERPREDICTED"?
I understand, Ben, for a man with a beard
sculpted by Michaelangelo "underestimated"
is way to crass.
Bush should be worried about being executed but i don''t think he is smart enough. He believes his own lies.
If obam gets eleted we are totally domed. I don''t want McCain either.
it also offered me the opportunity to send an email to president bush. I am currently overseas so am using my sons address to receive my mail stateside. I wrote and told him if he wakes up in the morning and the house is surrounded by FBI, not to be alarmed. I really don''t think they will take my email that seriously.
I wonder what it is like to be totally "domed"?
Posted by patriot12436 at 02:05 AM : Jun 10, 2008
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My response: I would guess they''re from Rep senators, but if they''re not; they certainly errantly supported Bush on numerous policies, so they desperately need to convince you that "everything" is OK!
Unfortunately, for them, you''re a thinker, and can see through their B.S.!
It''s really insulting that they would send out these ''rosy picture'' promos, in the hopes of getting your vote! But, they have to hope you''re stupid enough to believe it!! Well, enjoy!
We''ve been sacrificing for months, based on the news, and will continue to be thrifty, because that''s the way we are, living below our means. So, if times really do turn bad, we are prepared.
Of course he is, his "blind trust" continues to grow.
The Idiot-In-Chief is wasting millions of tax dollars on a meaningless trip (vacation) to Europe while half of the people in this country say their quality of life has been reduced by higher energy and food prices.
It would be nice if these were only the people who voted for him, but unfortunately that is not the case.
223 days, 16 hours, and 22 minutes to go.
Prove you''re insane, vote for McCain.
I yen for the days of a Federal Reserve that was proactive and not reactive like the one we have now that is helping to ruin this country and it''s economy to help bail out a bunch of corrupt bankers.
These guys are brillant are they not! I have not seen such stupidity ever. I mean they are not scientist they are artist they make a mess and call it art.
What a joke we have in this country.
Good little Shrub Worshiper.
Of course, the die hard neocons are absolutely certain despite all evidence to the contrary that those huge tax breaks given to the mega-wealthy are eventually going to trickle down to the rest of the country. If, when the trickle reaches you, it looks and smells like urine, that''s because it is.
Thanks for voting Republican.
Of course, the die-hard neocons are absolutely certain despite all evidence to the contrary that those huge tax breaks given to the super-wealthy are eventually going to trickle down to the rest of the country. If, when the trickle reaches you, it looks and smells like urine, that''s because it is.
Thanks for voting Republican.
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