Bernanke Emphasizes Need for Close Monitoring of Inflation
Bloomberg | Apr 5
Federal Reserve Chairman Ben S. Bernanke stated that policy makers must closely monitor inflation for signs that rising commodity costs are affecting consumer prices beyond a temporary phase. He noted, “As long as inflation expectations remain stable and well anchored,” and if commodity price increases slow as he predicts, “the rise in inflation will be transient.” Bernanke shared these insights in response to questions following his speech in Stone Mountain, Georgia. He emphasized the importance of vigilant monitoring, stating, “If my assumptions are proven incorrect, we will need to respond to ensure price stability.”
Since the Great Recession officially ended in June 2009, corporate profits have surged, while employment recovery has been comparatively lackluster. This raises the question: Is this disparity sustainable, or is stronger job growth on the horizon?
● The Government’s Role in the Market
By Eliot Spitzer
Summary via publisher, Boston Review Books
Eliot Spitzer, who served as the Attorney General of New York from 1998 to 2006, effectively addressed issues like corporate fraud and predatory lending. In this book, he examines the appropriate circumstances for governmental intervention in market activities. He critiques the 2009 bank bailout as a misguided approach that fueled public disdain towards government intervention by socializing risk while privatizing profits, thus perpetuating issues with institutions deemed too big to fail. Spitzer argues that effective regulatory policies can enhance market efficiency, fairness, and align with essential public interests.
In March, the major asset classes generally showed positive results, although foreign developed-market stocks and REITs underperformed. U.S. bonds experienced slight gains, according to the Barclays U.S. Aggregate Bond Index, which edged up by less than 0.1%. Conversely, inflation-linked Treasuries saw a notable increase of 1%, marking the third consecutive month of gains for TIPS—the highest return since last October, based on the Barclays U.S. Treasury TIPS Index.
The private sector saw nonfarm payrolls increase by 230,000 in March, slightly down from February’s 240,000 increase, as reported by the Labor Department reports. This marks a significant achievement, representing the 13th consecutive month of improvement in the private sector. Moreover, the increase is close to the highest level since the labor market began to recover in early 2010. However, despite these positive indicators, job growth of over 200,000 each month has not substantially impacted the persistently high unemployment rate, which barely shifted from 8.9% in February to 8.8% in March.
Economist Bob Dieli from NoSpinForecast.com points out that a previous chart comparing real (inflation-adjusted) wages with personal consumption expenditures was heavily influenced by a brief but significant round of deflation in the U.S. economy during late 2008 and 2009.
Earlier today, I shared a chart comparing real (inflation-adjusted) personal consumption expenditures with real average hourly earnings for production and nonsupervisory workers. This comparison, as explained in detail in Joseph Ellis’ book Ahead of the Curve
For the third consecutive week, new jobless benefit claims fell below the 400,000 mark, marking only the sixth time since the Great Recession officially ended in June 2009. The Labor Department reports that last week, initial claims decreased by 6,000 to 388,000. The four-week moving average also remains comfortably below the 400,000 threshold, sustaining a trend established over the past month.
Former Minnesota Governor Tim Pawlenty, now a presidential candidate, suggests that the nation may be on the brink of a new recession. While he may appear alarmist, his assertion holds some truth; economic contractions are indeed cyclical. The National Bureau of Economic Research (NBER) notes that since the mid-1800s, there have been 33 economic recessions, and it is likely that the 34th is on the horizon. Richard Fisher, president of the Dallas Federal Reserve, aptly remarked, “I devoutly hope our next downturn doesn’t come for quite some time, but it surely will come eventually.”
According to the latest ADP Employment Report, U.S. private sector employment grew by a net 201,000 jobs (seasonally adjusted) last month. This figure is slightly lower than February’s increase of 208,000, yet it conveys a clear message: job growth continues, albeit at a pace that remains modest relative to the economic needs for a significant and quick drop in the high unemployment rate.
This collection of articles encompasses essential insights from significant economic reports and analyses, shedding light on the fluctuating state of the economy and employment trends. From rising corporate profits to the persistent jobless rate, these discussions highlight the complexities that shape our economic landscape.
