This morning Federal Reserve Chairman Ben Bernanke spoke to the National Association for Business Economics.
First an Economist joke: Three econometricians went out hunting, and came across a large deer. The first econometrician fired, but missed, by a meter to the left. The second econometrician fired, but also missed, by a meter to the right. The third econometrician didn't fire, but shouted in triumph, "We got it! We got it!"
Now here are the Highlights:
He’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress.
The decline in unemployment may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” Bernanke said.
Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses.
Bernanke said “A wide range of indicators suggests that the job market has been improving, which is a welcome development indeed,” “Still, conditions remain far from normal, as shown, for example, by the high level of long-term unemployment and the fact that jobs and hours worked remain well below pre-crisis peaks, even without adjusting for growth in the labor force.”
Bernanke gave this warning, “We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Adding that he was particularly concerned about the number people out of work for six months or longer. “While cyclical and structural forces have doubtless contributed to the increase in long-term unemployment, the continued weakness in aggregate demand is likely the predominant factor,” he said.
NATURAL RATE OF UNEMPLOYMENT
Newlan's Truism: An "acceptable" level of unemployment is that which is acceptable to the government economist that still has a job.
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury