Bernanke between the lines: We're in for the mother of all jobless recoveries
Filed under: Economy
Given all the crazy, extraordinary stuff the Federal Reserve has been dragooned into doing in the last year ("quantitative easing," anyone?), it's easy to forget that it has only two, very simple mandates: price stability and full employment. Reading between the lines of Federal Reserve Chairman Ben Bernanke's speech Monday, it's clear the Fed will utterly fail on the second part of its directive for years to come.In other words, we're in for the mother of all jobless recoveries. Indeed, the best thing Bernanke could say about the unemployment situation is that it "may be getting worse more slowly."
Give the Fed chief this, however: He is remarkably consistent. That's not a knock on the guy -- no one wants a bipolar central banker -- but the more Bernanke makes the same points again and again, the more it's clear U.S. workers are doomed for a good long while.
Here are some of the distressing points Bernanke made again Monday at The Economic Club of New York: The official unemployment rate stands at 10.2%. (It's more like 17.5%, by the way, if you count the people who've given up looking for work.) About 8 million folks have seen their jobs in the private sector go poof in the last two years. And worst of all, gross domestic product needs to grow 2.5% a year just to absorb the 100,000 people entering the job market every month.
Now put that in the context of this forecast: Economists, on average, expect GDP to grow just 2.9% in all of 2010, according to The Wall Street Journal's economic forecasting survey. That's what Bernanke means when he says growth looks to be "moderate" next year.
No wonder the unemployment rate is forecast at 10.3% by the end of this year at still be 9.8% at the end of next year. Super-bear David Rosenberg, chief economist and strategist for Canada's Gluskin Sheff, sees unemployment perhaps topping out at, gulp, 13%.
Bernanke said the economy should continue to grow in 2010, but "important headwinds" will restrain the recovery, namely, the weak job market and continued tight credit for small businesses and households. Foreclosure rates will remain high, as well.
As Bernanke likes to say, employment gains may be "modest" early in the expansion. It seems the New Normal is also rewriting the dictionary. "Modest" now serves as a synonym for "near hopeless," too.



























Reader Comments (Page 1 of 7)
11-16-2009 @ 3:17PM
sgentilejr said...
Consumers are the Economy. The problem is that YOU the consumer are giving our jobs and our nation's wealth away with every Imported product that YOU purchase.
We will NEVER have any job growth if YOU keep buying so many imported products. Our soldiers are dying in hell holes for our country, yet YOU will not even look for the label to see where the products you buy are made. All you need to do to show your Loyalty and Patriotism for your country is put it back on the store shelf if was not made in the USA. All stores will stock their shelves with Made in the USA products if YOU do not buy the cheap, poorly made and frequently toxic and dangerous imported products.Can YOU be Loyal to your country? Buy American made ONLY.
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11-16-2009 @ 3:33PM
Axander said...
Right, because that strategy worked so well for Argentina when they decided to systematically implement import substitution industrialization. The first step is forcing un-natural buying restriction on the consumers to buy only American goods (even if we can't make them half as well for half the price as our chinese counterparts), then it's forcing american companies to use american built capital, which, again would end up costing more for the companies and then the consumers. How is forcing the majority of the company to buy cheap, over-priced goods loyal?
American industry doesn't need loyalist crazies forcing tariffs on everything we do, spouting off such antiquated nationalistic slogans like "Buy American" and "they took our jobs!" That'll just ruin us even further (again, look at Argentina in the 80's, they're economy imploded as a direct result of attitudes and policies like this). What needs to happen is that American industry needs to become internationally competitive again in something other than financial services.
We need something other than consumer demand to fuel our economy again. Look at Germany - some 40% of their economy is production driven and they pulled out of the international recession way quicker than we did because they actually have something to show for their work. We're just sitting on our asses hoping that people's thriftless spending habits will pick up again and bail us out.
11-16-2009 @ 3:31PM
Robert said...
You so right, but there some countries that one can buy from, i.e.Israel, some countries in Africa and Central America, certainly not Venezuela. It will take some time for us in USA to make some products we buy now from China, so we have to be selective to turn around.
11-16-2009 @ 3:54PM
htc said...
Sorry, can't afford that American-made stuff on Reaganomics wages. Maybe if we can get a middle-class tax cut and get the wealthy to pay their fair share people can find some money to spend again.
11-16-2009 @ 3:53PM
gary said...
I agree...corps have whored us out by sending work over seas then returning it to us to buy...but the thing is you have no choice...what and where can you buy American...in clothing anyway??
11-16-2009 @ 3:53PM
hotrodqd said...
these folks wont learn until the day comes when american military parts and weapons and ammo are imported from foriegn countries ....and america gets invaded and they dont have any means to defend themselves.....as sanctions and naval blockades prevent shipment .....how them bow and arrows going to work against hardware .....shall we ask the original inhabitants of the usa ?
11-16-2009 @ 5:56PM
Jon Lee said...
This is largely true. I don't think that we can get by with isolationism as a country, but between the loss of manufacturing jobs over the years, and the outsourcing of darned near everything, this is where we end up.
Ross Perot may have been one crazy, paranoid S.O.B., but he was right about htis, and so are you
11-16-2009 @ 6:51PM
kazuo6 said...
our education system is truly in need of revamping if all
it gives to students the idea of an american republic with
a great moat surrounding it, forbidding all imports and
consequently all exports. if you wish to go your way, you
will probably have to go back into the woods and try living
on forest roots and such wild animals as you can catch.
american capitalism thrives on the lowest cost and the
greatest possible profit. that means that manufacture of
products overseas fits the bill perfectly. so how many
us corportations think like you? not many!!!!!!!!!
11-16-2009 @ 7:31PM
gleeminghope said...
I totally agree, America is on life support and she is fighting for her life and we as Americans need to come together to save her. We need to stop this anti Union crap mentality and wow it is so socially cool to drive a foreign vehicle crap. IT is totally wrong to buy foreign. 9 out of the top 10 vehicles sold in Germany are made in Germany, 7 of the top 10 vehicles in France are made in France. While Korea and Japan no longer "directly" restrict U.S. Imports they put up huge barriers to them. Ford sold about 2,500 vehicles in Korea in 2008 compared to nearly 330,000 Hyundai and Kia vehicles imported to the U.S. Chevrolet sold one vehicle in Japan for every 1,300 Toyota's sold in the United States. Why, because the people in these countries are loyal to their country and businesses. They refuse to buy U.S. goods, so we should do the same.
Do you realize that over 60% of our recalled products come from China? They give us tainted milk, toxic dog food, toxic toys, toxic drywall...this is totally scary and wrong.
We are now facing a overcapacity around the world. Especially in car manufacturers. There are way too many plants and not enough demand. Every country is fighting in this war to survive and we in America are fighting for our lives, our economy, our jobs..we need to win this war. And, it starts with each and everyone of us. Demand U.S. goods, next time you rent a car, demand a U.S. car, buy American made cars, buy American made wine, american cheese, american vaccums..we need all the help we can get to survive.
America is fighting for her life...and we as Americans can save her...
11-16-2009 @ 8:42PM
Andrew said...
Consumers are the economy. It gets harder to buy American products when Nafta and Gatt helps foreign economy first. Big banks get bail outs, and still raise rates for credit cards, unreasonably to the consumers. Consumers constantly are getting scammed, by, big business (American and Foreign), US government, and your typical scammer who prey on hard working consumers and the elderly. True, some consumers have made stupid moves, like adjustable mortgage in a market when interest rates aren't likely to go any lower, and the government has decided to help the people who push consumers into bad decisions. Instead of bailing out the companies that cause the problem, the fed should plan on helping the consumer instead. After all, all the money that US consumers spend get sucked up a vacuum to where to its starting point.
11-16-2009 @ 8:44PM
Pfeiffer U. said...
sgentilejr, your opinion is far from right. By importing products we are able to produce more of what we have become better at producing. What if all the other countries in the world thought with she same simple minded bs? Would you rather we close our economy like china did?
11-16-2009 @ 9:47PM
modhawk said...
try to buy american made clothes maybe socks maybe undewear . american business went global and they no longer need us .thats the straight up facts .oh i agree with you on the china angle don't give them another reason to need another gallon of gas .So you wind up buying a 15 year old toaster oven from goodwill .I'm not kidding go to the store and look around . spend the extra dough and buy and oreck sweeper I think there made here you can correct me if I'm wrong what are you suppose to do
11-16-2009 @ 10:06PM
steve said...
i agree with you 100 percent but with little money people will buy cheap and worry about their families first and country second
11-16-2009 @ 10:30PM
Gary said...
Amen brother! Buy American (whats left)! I look for USA stuff, but consumer products are few and far between other than paper and pencils. Even a lot of pencils by American companies are made in red china. Lucky to find tshirts, underwear and jeans made here anymore rather than some hell hole jungle where children sew them up as slaves for greedy companies. Luckily, there are still several US companies making products for my model building hobby and I buy from them. While theres still quite a lot of industrial stuff made here, consumer products are pretty much gone. I'm afraid its too late unless big changes in the way government treats US businesses happen to bring the jobs back. Hard to compete when foreign countries subsidize their companies on top of lower taxes and labor. Would have been nice if osama used that bail out money for US manufacturing rather than bailing out crooked banks and aig. Politicians are such stupid a$$es.
11-16-2009 @ 10:45PM
jeff said...
Well...If YOU want ME to buy stuff that's only made in the USA, then YOU need to pay YOUR share of OUR taxes, or get off the GOVERNMENT tit...(ie..obama bail out). I'm a small business owner and I could care less if YOU get enough free stuff from ME to feed your EIGHT kids that YOU decided to have, when you couldn't afford ONE. So when YOU decide to pay YOUR SHARE, then YOU and sorry ass loser RON KETTELFINGER can tell ME where to buy MY stuff. thank YOU and have a nice evening.
11-16-2009 @ 10:48PM
George said...
Unfortunately, hardly anything is made in the US any more. When I started a company thirty years ago, I made a point in buying US made products, and in the beginning I say 90% was. Over the years less and less stuff was made here, and the last year I had the business (I sold it 2006) we had one(1!) line of products made here! Everything was made, you guessed it, in China! I hold a couple of patents, and when I was looking to have products manufactured here, I was told, point blank to: "Take it overseas". Untill the Yuan is allowed to float against other currencies, nothing will change. It is massively undervalued, my unscientific estimate is 200-500%!!!! and yes, I have been there and seen it with my own eyes.
11-16-2009 @ 11:51PM
Rodger said...
You are absolutely correct. We Americans have caused some of this to happen. I say "some" only because most of what happens in this country is not consistent with the will of the American public: the government is no longer representaive of our society. The government is hell bent to discourage capitalism. Further, most American companies will outsource to the detriment of the American worker. Even though I try to purchase American made products, I have discovered that I have very few (if any) choices in that regard. Our country will never see an economic recovery until we all come to our senses. I fear it may be too late.
11-17-2009 @ 1:18AM
jso said...
you sir obviously know nothing about economics... the world economy is so globalized that buying products from another country does not necessarily mean doom for American jobs.. what you CAN blame however is the huge AMERICAN corporations leeching jobs overseas so they can lower their labor costs and increase profits...remember when you point a finger, there's three pointed right back at you.. consumers need to spend.. period.. doesn't matter what products you buy
11-17-2009 @ 2:52PM
Paddy Cochrane said...
Right on. It should be a requirement that you are told what country everything is made in before you buy it. All outlets should be required to offer an american made alternate
11-16-2009 @ 3:20PM
sgentilejr said...
Jobless Recovery???? They have to be kidding or crazy. Without jobs, there will be NO RECOVERY. The economy cannot recover without JOBS. You are the economy and if YOU have no job and no money in your pockets to spend then there is no economy.
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