A trader on the floor of the New York Stock Exchange looks up at monitor after… (Jin Lee, Associated Press)
August 26, 2011|By Don Lee, Los Angeles Times
Federal Reserve Chairman Ben S. Bernanke, insisting that the long-term U.S. economic prospects remain good, took aim at Washington policymakers for causing upheaval in financial markets and failing to do their part in bolstering the flagging recovery.
Bernanke did not rule out new action by the central bank to stimulate growth, but he emphasized in a much-anticipated speech Friday that the Fed could do only so much by regulating interest rates and other monetary policy.
He practically goaded the White House and Congress to do more to create jobs and strengthen the economy using fiscal policy, which would include both tax cuts and federal spending.
Although it is important to reduce the nation’s deficits over time, he said in unusually blunt language for a central bank leader, it would be a mistake to “disregard the fragility of the current economic recovery” and create “fiscal head winds,” a reference to short-term spending cuts at a time of immediate economic needs.
Some analysts took Bernanke’s speech as a sign that the Fed was prepared to provide new monetary stimulus, possibly as early as its next policymaking meeting in late September.
“He basically punted until then,” said Cornelius Hurley, a Boston University professor and a former assistant general counsel at the Fed.
Rep. Brad Sherman (D-Sherman Oaks) said Bernanke would probably have to take some action because no major fiscal stimulus was likely to come out of the deeply divided Congress and a “political system that is mostly broken.”
Bernanke spoke at an annual Fed conference in Jackson Hole, Wyo., shortly after the government released a report that revised downward the second-quarter economic growth to a meager annual rate of 1%, from 1.3%.
The revision was largely a result of weaker exports. On the other hand, private spending and investment in the April-through-June period were slightly higher than initially estimated.
Growth in the second half of this year is expected to be a bit stronger, but consumer spending — a major driver of the economy — remains weak amid sluggish hiring and stagnant income gains.
Read More: http://articles.latimes.com/2011/aug/26/business/la-fi-bernanke-gdp-20110827
Bernanke did not rule out new action by the central bank to stimulate growth, but he emphasized in a much-anticipated speech Friday that the Fed could do only so much by regulating interest rates and other monetary policy.
He practically goaded the White House and Congress to do more to create jobs and strengthen the economy using fiscal policy, which would include both tax cuts and federal spending.
Although it is important to reduce the nation’s deficits over time, he said in unusually blunt language for a central bank leader, it would be a mistake to “disregard the fragility of the current economic recovery” and create “fiscal head winds,” a reference to short-term spending cuts at a time of immediate economic needs.
Some analysts took Bernanke’s speech as a sign that the Fed was prepared to provide new monetary stimulus, possibly as early as its next policymaking meeting in late September.
“He basically punted until then,” said Cornelius Hurley, a Boston University professor and a former assistant general counsel at the Fed.
Rep. Brad Sherman (D-Sherman Oaks) said Bernanke would probably have to take some action because no major fiscal stimulus was likely to come out of the deeply divided Congress and a “political system that is mostly broken.”
Bernanke spoke at an annual Fed conference in Jackson Hole, Wyo., shortly after the government released a report that revised downward the second-quarter economic growth to a meager annual rate of 1%, from 1.3%.
The revision was largely a result of weaker exports. On the other hand, private spending and investment in the April-through-June period were slightly higher than initially estimated.
Growth in the second half of this year is expected to be a bit stronger, but consumer spending — a major driver of the economy — remains weak amid sluggish hiring and stagnant income gains.
Read More: http://articles.latimes.com/2011/aug/26/business/la-fi-bernanke-gdp-20110827
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