Bernanke: Yeah, the jobs market is getting pretty weak, huh?

posted at 2:41 pm on June 7, 2012 by Ed Morrissey

A warning that the Fed will take action — as in, another ride on the quantitative-easing route? Or rather an acknowledgment that the Fed has done all it can do?  Ben Bernanke’s testimony will get dissected by economic talmudists for the rest of the week, but the underlying message is that the economy is not getting any better, and it’s likely to slow down even further:

Federal Reserve Chairman Ben S. Bernanke expressed concern Thursday morning that recent weakness in the jobs market may continue without faster economic growth, but he held back from signaling that the Fed would act to stimulate economic activity in the near term.

During his opening testimony before the Senate-House Joint Economic Committee, Bernanke said that while the economy had enjoyed robust jobs gains in the early part of the year, the dramatic slowdown in hiring over the past two months may indicate “that more-rapid gains in economic activity will be required to achieve significant further improvement in labor market conditions.”

In follow-up questioning by lawmakers, Bernanke said he had not yet decided whether the economy had worsened enough to justify additional action, signaling that the Fed could yet conclude in coming days that it must do more.

“The key question we’ll be facing is: Will economic growth be sufficient to achieve continue progress in the labor market?” Bernanke said. “My colleagues and I are still working on our own assessments.”

Bernanke left open the possibility that the Fed might try another round of quantitative easing to boost the economy, but two factors probably would discourage that absent a dramatic decline in economic activity this year.  First, with an election approaching, the Fed won’t want to look as though they are staging a political intervention rather than an economic intervention.  The Fed already has enough animosity on Capitol Hill without exacerbating it further.

The other factor is that the QEs haven’t really produced much in the way of growth.  The Fed doesn’t have much to work with anyway, since money is so loose at the moment that there is nowhere to go but tighter on monetary policy.  Even with the QEs, the rate of economic growth and job creation are far below what we normally see in recoveries.  Bernanke called the rate of job expansion this winter “robust,” but that’s patently ridiculous.  Jobs grew at a pace of about 217,000 per month, which is barely what we’d see in post-expansion maintenance months, let alone in pre-expansion mode.  That average rate certainly beats what we’ve seen since, but that’s damning with faint praise.

As John Merline at IBD explains, that’s especially true when compared to other recoveries after deep recessions:

The 1957-58, 1973-74 and 1981-82 recessions were the sharpest post-war slumps until the Great Recession. From those lows, the economy rose 15%, 18.5% and 19.6% over the next 11 quarters, respectively, vs. just 6.8% for the Obama recovery.

The president and his economic advisers also initially expected a solid recovery this time around.

Obama’s first budget in February 2009, forecast “rapid growth” that “is expected to push down the unemployment rate … to 5% by the end of 2013.” That month, Obama told the public that the $830 billion stimulus plan would “ignite spending by businesses and consumers” and “usher in a new wave of innovation, activity and construction.”

The administration’s August 2009 budget update claimed that “once the recovery takes hold, it is expected to gain momentum as time passes.”

And as the true depth of the recession became clear over the next several months, the White House continued to promise a solid recovery.

Merline remembers the promises of the first “Recovery Summer”:

Obama’s next budget in February 2010 predicted 3.8% real GDP growth in 2011 and 4.3% in 2012. The White House Council of Economic Advisers that year touted the “rapid turnaround in growth” in 2009 as “remarkable” and “impressive.”

In April 2010, Vice President Biden promised that “some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.” (Monthly job gains have averaged just 133,000 since Biden said that.)

The problem isn’t Fed policy, and the problem won’t get solved by Bernanke.  The problem is that Barack Obama’s economic and regulatory policies have interfered with the normal recovery process.  Those policies introduced massive new costs and ambiguities into the investor environment, including ambiguities about costs.  Instead of championing cheap energy and streamlining of regulation — the approach that has led to all of our other robust recoveries — Obama went the opposite direction, using the economic situation to argue for his regulatory adventurism and innovations.

Bernanke has to deal with the mess at hand, including the reality that the Obama administration won’t change policy direction on the economy.  That will almost certainly lead to lower growth and perhaps another recession, which means that Bernanke will probably try one more intervention just to limit the immediate damage, while doing long-term damage to savings and capital.  That cycle will continue until voters put someone else in charge.

Does it matter much, though?  Bernanke (jokingly) tells Sen. Jim DeMint that a trillion here, a trillion there … and pretty soon you’re talking about real money:

Bernanke says that the deficits are what matters, more so than the interest burdens they create, and he’s right — but it’s interesting to see what passes for real money these days.

Update: For some weird reason, I wrote qualitative easing when I meant quantitative.  I’ve fixed it above, thanks to Pain Train, who pointed it out.


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Gee, I wonder.

Bmore on June 7, 2012 at 2:43 PM

Lets see, econ 101, what does that to the job market?

Bmore on June 7, 2012 at 2:44 PM

uh, uh, uh trillion there trillion here, uh uh…

Sounds like anyone else we know?

cajun carrot on June 7, 2012 at 2:44 PM

…that idiot needs to be unemployed!

KOOLAID2 on June 7, 2012 at 2:44 PM

The 0 Economy?

Bmore on June 7, 2012 at 2:44 PM

QE to infinity…

PatriotRider on June 7, 2012 at 2:46 PM

Qualitative or quantitative?

The Rogue Tomato on June 7, 2012 at 2:49 PM

Can we stop calling it a recovery?

~kthxbai

wytshus on June 7, 2012 at 2:50 PM

Bernanke called the rate of job expansion this winter “robust,” but that’s patently ridiculous.

I’ll say. An population that is living longer, a job growth rate that doesn’t match the birth rate, and the cumulative effect of abortions on the workforce, all piled on top of an economy being strangled by a socialist administration.

Bernanke is delusional and ridiculous!

AubieJon on June 7, 2012 at 2:50 PM

The other factor is that the QEs haven’t really produced much in the way of growth.

Isn’t that pretty obvious when you’re thinking about rolling out a third one because the first two got us to this point?

reddevil on June 7, 2012 at 2:51 PM

Testimony went pretty much as expected; monetary policy has done as much as possible, and they are probably keeping what little powder they have left dry in case of real emergencies. His warning against tightening fiscal policy (increasing taxes, cutting spending) was boilerplate, and will probably be overcome by events once the election is over. Basically, he followed the script and the markets are applauding. Now, back to Europe …

TouchdownBuddha on June 7, 2012 at 2:52 PM

Here’s my bet: June jobs report revises May’s to zero and June’s is negative.

Obama is toast.

Dusty on June 7, 2012 at 2:52 PM

We may see some improvement in the third quarter if SCOTUS does its job.

agmartin on June 7, 2012 at 2:53 PM

Just think of all the billions that will be pocketed by people who know exactly, to a minute, when Ben “Dover” Bernanke shoves QE3 up ours. Compared to that, do American economy’s woes mean anything?

Archivarix on June 7, 2012 at 2:54 PM

Bernanke speaks, stocks shriek, freak, weak.

stukinIL4now on June 7, 2012 at 2:55 PM

BTW, where’s the stories on the debt ceiling? Aren’t we gong to hit it in early August and won’t that be after the summer recess starts?

Dusty on June 7, 2012 at 2:55 PM

A warning that the Fed will take action — as in, another ride on the qualitative-easing route?

Yes, more of the same that gave us a weak job market.

rickv404 on June 7, 2012 at 2:57 PM

Bernanke left open the possibility that the Fed might try another round of qualitative easing to boost the economy

Yeah, throwing more freshly-printed money into the economy worked real well for Germany in the 1920′s. And how about in Zimbabwe? That Mugabe fellow did a bang-up job with that economy.

iurockhead on June 7, 2012 at 3:00 PM

A trillion here, a trillion there. It’s all one big joke to these people. As long as their egos are stroked, they’re cool with the suffering being brought on the rest of us.

Kissmygrits on June 7, 2012 at 3:04 PM

We may see some improvement in the third quarter if SCOTUS does its job.

You know the amazing thing is it seems the Supreme Court never leaks.

we can speculate but you think the decision which we know has been made has not leaked.

gerrym51 on June 7, 2012 at 3:07 PM

The Bernanke sux.

txsurveyor on June 7, 2012 at 3:09 PM

QE’s are economic coffee – they’ll help you get through the short term, but long term it just makes you pee more . . .

PastorJon on June 7, 2012 at 3:11 PM

How does Obama know that the economy won’t get any worse ?

“because she doesn’t go all the way down”

J_Crater on June 7, 2012 at 3:15 PM

Here’s a thought, throw all the Democrats out of Congress and watch the economy come roaring back.

GarandFan on June 7, 2012 at 3:16 PM

Bernanke’s biggest lie (which the committee let fly by) was that he thinks there will be no problem with reversing all of this monetary expansion and twisting out long … when appropriate. LOL. Does anyone have any ida HOW MUCH PAIN we are going to experience if (because they intend to never do it) the Fed decides to actually reduce their balance sheet to sane levels? It doesn’t appear so, and Bernanke’s tossing the question aside as if it is silly is about the most offensive flat-out lying I have ever seen (and that’s saying quite a bit).

The Fed is running under the notion that they will NEVER have to tighten. Years and years and years of trillions and trillions and trillions of monetary expansion and balance sheet bloating (all to get a whopping 2% GDP growth – Woo Hoo!!!) … and this blithering idiot acts as if the coming monetary contraction won’t be much of anything (not to mention the fact that the Fed has never timed ANYTHING correctly).

Unbelievable. But, America understands this and accepts it, so … we deserve it. It is going to be a hell that people are just happy to ignore for another dose of monetary bath salts. Great … Just great.

ThePrimordialOrderedPair on June 7, 2012 at 3:18 PM

Greenspan and Bernanke, the manipulators, should go to Hades, soon.

Schadenfreude on June 7, 2012 at 3:22 PM

Investment morons are pre-cheering the latest reckless, irresponsible, out-of-control, treasonous plan by bailout bernanke and his feckless fed plan to further devalue the dollar in another desperate effort to try to compensate for OBOZO’s failed economic policies and to further try and save OBOZO’s failed presidency. Bailout bernanke continues to follow the failed ideology of keynsian socialism by artificially manipulating interest rates and preventing the free market from determining the optimal rate. These actions will fundamentally FAIL, just as QE1, QE2, Twist, etc all have.

INSANITY = doing the same thing over and over again but expecting a different result.

The current Fed is stacked with OBOZO appointees, which illustrates how totally clueless and incompetent they are.

NB: With the right President and Congress elected in Nov, bailout bernanke will be FIRED and the feckless fed will be stopped from creating destructive economic bubbles by manipulating interest rates contrary to the free market and by printing mega-tons of money to give to their BIG BANK and Wall Street pals at zero interest (i.e., FREE), which has NO POSITIVE ECONOMIC AFFECT other than boosting BIG BANK PROFITS and creating a bubble in equity prices.

TeaPartyNation on June 7, 2012 at 3:32 PM

Update: For some weird reason, I wrote qualitative easing when I meant quantitative. I’ve fixed it above, thanks to Pain Train, who pointed it out.

Qualitative or quantitative?

The Rogue Tomato on June 7, 2012 at 2:49 PM

I didn’t know my name was Pain Train.

The Rogue Tomato on June 7, 2012 at 3:36 PM

o/t, but…

Try this on for spin…

Holder Claims Emails Using Words ‘Fast and Furious’ Don’t Refer to Operation Fast and Furious…

http://cnsnews.com/news/article/holder-claims-emails-using-words-fast-and-furious-don-t-refer-operation-fast-and

**eyeroll*

Resist We Much on June 7, 2012 at 3:37 PM

Greenspan and Bernanke, the manipulators, should go to Hades, soon.

Schadenfreude on June 7, 2012 at 3:22 PM

Yes, and take Bush, Obama and their respective parties with them.

rickv404 on June 7, 2012 at 3:43 PM

The problem isn’t Fed policy, and the problem won’t get solved by Bernanke. The problem is that Barack Obama’s economic and regulatory policies have interfered with the normal recovery process.

And he is doing it deliberately to destroy the middle class. Ultimately it will not work. He will destroy the democrat party.

dogsoldier on June 7, 2012 at 4:09 PM

Obama’s next budget in February 2010 predicted 3.8% real GDP growth in 2011 and 4.3% in 2012. The White House Council of Economic Advisers that year touted the “rapid turnaround in growth” in 2009 as “remarkable” and “impressive.”

In April 2010, Vice President Biden promised that “some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.” (Monthly job gains have averaged just 133,000 since Biden said that.)

.
What a great campaign ad. Just follow it with Mooch and Barry begging for 4 more years to “finish what we started”.

ronsfi on June 7, 2012 at 4:14 PM

you wingnuts must have missed the News with Shep this PM…everything is great in libville..the intial claims shows ‘healing’ and the stock market was up 100 points because of the good jobs numbers….well, then i turned shep off

i hear that shep makes 8 million a year…yet one more Kardashian newsreader

r keller on June 7, 2012 at 4:34 PM

Romney says he will get rid of Bernanke. I’d vote for Romney for that reason alone.

sherrimae on June 7, 2012 at 8:27 PM

Bernanke: Yeah, the jobs market is getting pretty weak, huh?

Bernanke’s motto: If a man is drowning, throw him an anchor!!!

landlines on June 7, 2012 at 11:15 PM

Break neck must think the world is stupid and very malliable that are just like a flock of sheep who will follow his orders to walk off the edge of the earth.

Remember, the results of their actions from 1913 are finally becoming a reality that only those who believe in socialcommunism will survived at the lowest end of the ladder.

MSGTAS on June 8, 2012 at 9:48 AM

Update: For some weird reason, I wrote qualitative easing when I meant quantitative. I’ve fixed it above, thanks to Pain Train, who pointed it out.

Qualitative or quantitative?

The Rogue Tomato on June 7, 2012 at 2:49 PM

I didn’t know my name was Pain Train.

The Rogue Tomato on June 7, 2012 at 3:36 PM

I’m betting he e-mailed the website instead of posting a comment here. I think that is a better way to get their attention.

gekkobear on June 8, 2012 at 4:11 PM