In an appearance before the Joint Economic Committee, Bernanke blamed slow-growing consumer spending, which accounts for 70 percent of economic activity, on persistently high unemployment and the gnawing fear among a growing number of Americans that their jobs may be at risk. After noting that the decline in home values and financial assets also contributed to decreasing confidence, he said “probably the most significant factor depressing consumer confidence, however, has been the poor performance of the job market.”
Macro Tides: How Much Longer? | The Big Picture
Forty three months after the recession began in January 2008, almost 5% of the labor force remains unemployed. In 7 of the eleven recessions since World War II, all the jobs lost during the recession were filled within 24 months. What’s happening in this ‘recovery’ is simply unprecedented.
FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2011
The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets.
………The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.
via FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2011.
Rate cuts are coming – macrobusiness.com.au
The recent seasonal adjustments to the CPI and the reduction in the level of underlying inflation blunts the force of the RBA’s recent argument about inflationary pressures. But, absent an offshore catalysing event, that alone won’t make them cut rates.
Rather I think that household retrenchment and saving will lower economic activity in the economy and that the RBA has overplayed the extent that the mining boom induced income will wash through the Australian economy.
Increasingly, we are getting confirmation of this theory. Unfortunately, we are seeing Australians lose jobs at an increasing rate. Data released yesterday by Westpac on consumer unemployment expectations suggests this is going to get worse.
Jobs Paralysis Raises Odds of Fed Action – Real Time Economics – WSJ
Job market paralysis in August increases the chance the Federal Reserve will do something new to help the economy……. The current environment is pushing the Fed towards action. A week ago, Chairman Ben Bernanke told a gathering of the world’s top economic officials he was expanding the length of the upcoming September Federal Open Market Committee to give policy makers additional time to talk about what the Fed can do, which by itself increased the odds something was going to happen.
via Jobs Paralysis Raises Odds of Fed Action – Real Time Economics – WSJ.
Obama’s Jobs Plan May Include ‘Infrastructure Bank’
With only one week to go before President Obama details his plan to revitalize the stalling economy, Labor Secretary Hilda Solis vigorously defended the administration’s efforts to crank up hiring during a speech on Tuesday at the National Press Club. She stressed that Obama’s plan will include a payroll tax cut extension, an unemployment benefits extension, and the creation of a national infrastructure bank to rebuild roads and railroads with a mix of private and public funds.
It’s Too Late For Obama To Create Jobs, Says ECRI’s Achuthan
Economic Cycle Research Institute co-founder Lakshman Achuthan: “There’s nothing they’re going to be able to do about that near-term direction in the unemployment rate, especially if we slip into a recession because every time you have a recession by definition the unemployment rate will be spiking.”
… Achuthan says the time to act was in the spring when the economic indicators started to weaken. “We were above 200,000 [monthly payrolls] and we’re not going back there anytime soon,” he says. “We’re going to continue to weaken at least through the end of this year,” which is (more) grim news for the millions of Americans in need of work.
via It’s Too Late For Obama To Create Jobs, Says ECRI’s Achuthan.
Portugal Braces for Austerity Battle – WSJ.com
Portugal has little choice but to take tough steps. The country sought international help in April after failing to convince investors it was doing enough to shore up its shaky finances. In exchange for a €78 billion, three-year loan, Lisbon promised the European Union and the International Monetary Fund that it would slash its deficit and make structural changes to spur growth in key sectors.
The problem is these efforts are expected to prolong the economic slump at least two years and drive up unemployment, already at 12%.