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It May Take 5 Years For Jobless To Hit 6%

From an unfazed Associated Press:

Fed boss: It will take years for jobs to come back

By Jeannine Aversa, AP Economics Writer
January 7, 2010

WASHINGTON – Federal Reserve Chairman Ben Bernanke told Congress Friday that there’s increasing evidence that a "self-sustaining" economic recovery is taking hold, but he said the Fed’s $600 billion Treasury bond-buying program is still needed because it will take years for unemployment to drop to more normal levels.

Testifying before the Senate Budget Committee, Bernanke offered a more optimistic outlook, saying the economy should grow more strongly this year as consumers and businesses boost their spending.

However, he said that even with the expected improvements, it could still take four to five years for unemployment to drop to a historically normal rate of around 6 percent

As far as we know, it’s never taken anywhere this long for any other recession in our nation’s history, apart from the Great Depression. So what is so different this time?

Maybe they are doing something wrong? Or maybe Obama really has repealed the laws of economics and done away with normal business cycles, just like he promised to.

The Fed chief defended the central bank’s much criticized decision in November to start buying $600 billion in Treasury’s through June. And, he gave no hint that the Fed would change its course

Bernanke predicted that the overall pace of the economy will be "moderately stronger" this year and said the Fed recently has seen "increased evidence that a self-sustaining recovery" is taking place…

"Notwithstanding these hopeful signs … employers reportedly still reluctant to add to payrolls, considerable time likely will be required before the unemployment rate has returned to a more normal level," Bernanke said. "Persistently high unemployment, by damping household income and confidence could threaten the strength and sustainability of the recovery," he warned.

Bernanke said unemployment is likely to be close to 8 percent two years from now

We almost hope he is right. Because if he is, we won’t have Mr. Obama to kick around anymore, two years from now.

This article was posted by Steve on Friday, January 7th, 2011. Comments are currently closed.

6 Responses to “It May Take 5 Years For Jobless To Hit 6%”

  1. Rusty Shackleford says:

    No one in the history of this nation has done more harm to the economy than the socialists who are/were in power over the past four years. Unfortunately, the general public seems to have a very short memory about such things and when good times come, as I hope they do, they will have forgotten how Reid the red, Pelosi, Franks, Dodd, Kennedy, et al and the pinnacle of political correctness, Obama all worked together to try to shove Keynesian economics up our a__. Given the extraordinary examples in the world of how such structures fail, one would think that they could connect the dots and see the potential for bad things to happen. That is, unless they wanted those bad things to happen. Making omelets by breaking a few eggs and so on, eh?

    “Fundamentally transform” is phrase that kept and keeps jumping out at me. Make the US just like every other nation….corrupt, inferior, and somehow repentant for some alleged past transgression(s). We have home-grown enemies alright. But they’re not the ones Icompetano thinks they are.

  2. GetBackJack says:

    Well, when Bubble Jobs are created for Media-Driven political gain, instead of the hard work of creating real jobs … say in Tech, Energy, Research, Infrastructure, etc … yeah, I’d say the fake bubble jobs will be a long time coming back.

  3. Petronius says:

    Official unemployment is currently 15.47M. That is an increase in unemployment of 570,000 since November, when unemployment stood at 14.9M.

    To reach 5% unemployment (a level considered unacceptable when Bush was President), we would have to find jobs for about half of the 15.47M unemployed people.

    To put just half of those 15.47M people back to work between now and the 2012 election, you would need to create over 350,000 jobs per month every month. When new entrants to the workforce are considered (most of whom are illiterate and unskilled immigrants, the remainder from internal population growth), you would need to create well over 450,000 jobs per month.

    The idea behind all of the government stimulus spending and QE has been to stimulate growth in the economy and create jobs. Actually that is just a pretext. The Congress has been spending public money for entirely different purposes –– to reward its friends in the Ruling Class and to transfer wealth to its constituents. And as for the Fed, it appears that the Fed is trying to bail out those Americans with debt and to boost housing prices; the Fed may also be deliberately attempting to weaken the US dollar in order to encourage American exports. The Fed issues money to backstop the Treasury, Wall Street, and the stock market, while holding short-term rates low to boost the real estate market. This protects the interests of the elites. Of course somebody is going to have to pay for all this, and that’s where we come in. The American middle class and working class are going to be driven to the wall by inflation. But for the sake of argument, let’s assume their motives are pure as the driven snow. The fact remains that their stimulus has not worked.

    The whole idea of stimulus is experimental and highly problematic. You really cannot create prosperity by borrowing and printing more money. But, according to stimulus theory, if the economy could grow fast enough, then tax revenues would grow (Reaganomics), the public debt to GDP ratio would come down, and the government budget would come under control (assuming there is not a fresh injection of new government deficit spending). This rebalancing would lead to lower interest rates, and spur further recovery and job creation. So the theory goes.

    The problem, however, is that the US economy has a giant Liberal boot on its neck, and as a result the economy is growing far too slowly in the current “recovery.” In fact, as I explained last month, the economy is in crisis. The GDP growth (which is mostly government spending anyway) is below the trend line necessary to halt the ongoing month-to-month deterioration in employment. Long-term interest rates are climbing, and inflation is impacting prices for foodstuffs, energy, commodities, and consumer goods. The rising price of gasoline, standing alone, is reason enough for concern.

    In these circumstances, government debt and interest on the debt grow faster than the economy. The fiscal gap (the difference between government spending and tax receipts) grows wider and wider. We would need to see above-trend-line economic growth be sustained for several years in order to reverse the course that we are now embarked upon.

    Of course if they were serious about reducing unemployment, there are many simple steps that could be taken to remove the Liberal boot from the neck of the economy.

  4. River0 says:

    Bernanke is stating the obvious. We’re screwed in the medium term.

    It will take a miracle for us to recover the vitality we’ve lost. The Satanic Obummer and his demonic cronies have done so much permanent damage – setting what are essentially time bombs of regulation far into the future – that it’s unlikely we’ll have any job growth for years. It was the astonishing growth of computer manufacturing in the later ’80’s, and then the growing internet in the late ’90’s and into 2000 that gave us growth. Now China and the rest of the world are doing it all a lot cheaper.

    Plus, now we have almost 100% more national debt than we did eight years ago. Somehow we have to escape its clutches.

    We need a new gig, perhaps nanotechnology or micromachines, to get us back into the high-tech forefront.

  5. JS says:

    What the Fed is doing is not only evil, but should be considered crimminal. They are wiping out the savings of millions of people who count on that money for their only source of income. Deliberate inflation is immoral and Bernake should be shot, but I would be okay with removed from office and denied employment in any public office, or in connection to it, for life. Lets see him try and earn a living producing something of value for once. Maybe then he would see how his policies have made a dollar that doesn’t go very far.


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