Bernanke Says Economy Is Stabilizing, But Unemployment Rate Still Rising

By Mariko Lamb - Talk Radio News Service

The pace of economic decline has shown signs of gradual stabilization since April, but the labor market continues to weaken, said Federal Reserve Board Chairman Ben Bernanke during testimony before the House Committee on Financial Services Tuesday.

“Many of the improvements in financial conditions can be traced, in part, to policy actions taken by the Federal Reserve to encourage the flow of credit,” he said. Federal Reserve recovery programs such as the Term Asset-Backed Securities Loan Facility (TALF) and the Supervisory Capital Assessment Program (SCAP), both implemented this year, have restarted classes of small business and consumer securitization markets, increased investor confidence in the U.S. banking system, and raised equity in public markets.

Despite better conditions in financial markets and optimistic economic prospects, the unemployment rate continues to rise. “Although the unemployment rate is projected to peak at the end of this year, the projected declines in 2010 and 2011 would still leave unemployment well above FOMC participants’ views of the longer-run sustainable rate,” Bernanke said.

Further Federal Reserve and Reserve Bank projections indicate “subdued” inflation over the next two years, a slight increase in output at the end of this year, and a gradual recovery starting in 2010 with some acceleration in 2011.

To quell GOP committee members’ concerns about the Federal Reserve’s extensive intervention in monetary policy, Bernanke said, “The extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed.”

Bernanke emphasized that the Federal Reserve is a non-partisan, independent organization and does not get involved in details of specific policy programs such as healthcare; however, he urged Congress to “think about the implications of the federal budget and make sure that we have a trajectory that will be sustainable for the medium term.”

America in a ditch

by Christina Lovato, University of New Mexico-Talk Radio News Service


"Today's numbers underline the need to act, and to act now." said Chairwoman Carolyn Maloney (D-NY) at a Joint Economic Committee hearing today.

Today, the U.S. Department of Labor reported that the unemployment rate has risen from 7.2 to 7.6 percent and according to other figures released, 3.6 million jobs have been lost since the recession began in December 2007, including the nearly 600,000 jobs lost in January only.

Senator Robert P. Casey (D-PA) was particularly alarmed from the minority unemployment statistics expressing that, "As bad as this recession has been overall for all Americans it has had a particularly disproportionate adverse effect on African Americans and Latinos." Since the start of the recession, December, 2007, the unemployment rate for African-Americans has gone from 8.9 to 12.6 percent and for Latino's it has risen from 6.2 to 9.7 percent.

The sectors of education and healthcare have maintained relative stability and there has been a job growth seen in those areas. There was a rise in jobs in education and that area has gained 39,000 jobs and in healthcare there has been a growth of 19,000 jobs. In the past three months the motor vehicle and parts industry has lost 75,000 jobs in the major auto producing states.

Chairwoman Maloney ended her opening statement by discussing the economic recovery package. "Alarm bells are sounding and our economic recovery package must make its way to the President as soon as possible. The current economic crisis requires bold solutions that address the magnitude of our economic woes, and the American Recovery and Reinvestment Plan will do just that." she said.

80,000 jobs lost in March

Keith Hall, the commissioner of the Bureau of Labor Statistics testified before the Joint Economic Committee on the March employment statistics. He reported that employers across all sectors of the labor market cut payroll by 80,000 in the month of March. This has cause the unemployment rate to rise from 4.8 percent to 5.1 percent in the first quarter. The total decline in the last quarter was 232,000 jobs. In his opening statement Hall said, "I would note that the labor market conditions started to weaken more than a year ago." He later added that 68,000 of lost jobs are in hosing-related industries.

There were only three members present. Sen. Charles Schumer (D-NY), Sen. Sam Brownback (R-KS), and Rep. Baron Hill (D-IN) who acted as chairman. Schumer only stayed to make an opening statement saying that these numbers should serve "as a wake up call" to the Bush administration. In the questions both Brownback and Hill asked Hall to forecast the next quarter and comment on the policy context of the recent data. Hall repeatedly refused to project data or give an opinion on policy, saying that the numbers should speak for themselves. He refused to define the economy or the labor market as in a recession.



Construction jobs were the hardest hit, loosing 51,000 jobs in March. Since peak employment in September 2006, total construction employment is down by 394,000 jobs. Another sector that has decreased was manufacturing. Manufacturing jobs decreased by 48,000 and automobile manufacturing took half of those losses. In his written statement Hall reported, "The number of unemployed persons who were job losers continued to trend up. Job losers represented 54 percent of all unemployed persons in March, up from 48 percent 12 months earlier." 5,000 jobs were lost in the financial activities sector, which is normally considered a growth category.

Hall reported that the only sectors to add jobs were education and health care. In these sectors combined 42,000 jobs were gained. He said that overall this indicated that consumer spending was weak, making companies less likely to hire temps. He said that the labor market figures are consistent in what he described as "the general weakening of the country."