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Bernanke: Job Growth Not “At the Pace We’d Like” in 2011

BenBernanke_talkradionews-Flickr

Federal Reserve Chair Ben Bernanke (photo: talkradionews)

Ben Bernanke spoke at a small business forum today, and basically said that the economy would grow in 2011 but not enough to boost hiring.

“We see the economy strengthening,” Bernanke said during a Small Business Forum in Washington DC co-sponsored by the FDIC and CNBC. “It has looked better in the last few months. We think a 3 to 4 percent-type of growth number for 2011 seems reasonable.”

“Now that’s not going to reduce unemployment at the pace we’d like it to, but certainly it would be good to see the economy growing and that means more sales, more business,” he added.

The stubborn unemployment numbers dwarf any other economic statistics in the eyes of the American people. And as well they should; job security is inseparable from economic security. The Federal Reserve chair, then, concedes that job growth won’t be at an acceptable level, but the only time he ever talks about fiscal policy that would counteract that, he mentions dealing with the deficit, which would end up contractionary and harmful to job growth.

This is a critical moment for the unemployment crisis. After a tick downward, first-time jobless claims hiked back up last week. Increases in commodity prices like food and oil, which are tied more to global growth than inflationary by-products of monetary policy, are starting to be worthy of conversation as a net lag on the economy. The economic indicators remain mixed at best, and at the top, people still need jobs.

A modicum of urgency would be nice.

“It’s not going to happen overnight,” he said. “The economy’s got to come back. Confidence has to come back.”

On the current credit squeeze, the Fed chairman said there has to be a balance between banks being cautious with lending and small businesses that are unable to get credit.

“We got into trouble in the first place by making too many bad loans,” he said. “So you have to make good loans. And you have to have credit-worthy borrowers. But we can do that by putting in the effort.”

Bernanke cited community banks, which have stepped in to make loans that big banks aren’t willing to make.

“One of the advantages of community banks is that they have long-standing relationships,” he said. “They understand the business better. They know the people. That’s one reason why community banks have stepped into the breach…There are substitutes for lazy lending, which is the hard work of understanding the business.” [cont’d.]

RELATED LINKS
Job Outlook Improving: FedBair: Time To Accept Dodd-FrankDodd-Frank Creates More Uncertainty: Rep. BachusLack of Credit Leads Some Borrowers to Controversial Payday LendersBanks CEOs Battle for AIG
Bernanke’s comments came a day after after the Federal Reserve said the battered U.S. labor market may finally be looking up.

The Fed’s Beige Book, based on anecdotal reports from the business contacts of the central bank’s regional branches, painted an increasingly bright, if cautious, picture.

The findings were consistent with a recent pick-up in U.S. economic data that has prompted some economists to beef up their forecasts for growth in the first half of 2011.

CommunityThe Bullpen

Bernanke: Job Growth Not “At the Pace We’d Like” in 2011

Ben Bernanke spoke at a small business forum today, and basically said that the economy would grow in 2011 but not enough to boost hiring.

“We see the economy strengthening,” Bernanke said during a Small Business Forum in Washington DC co-sponsored by the FDIC and CNBC. “It has looked better in the last few months. We think a 3 to 4 percent-type of growth number for 2011 seems reasonable.”

“Now that’s not going to reduce unemployment at the pace we’d like it to, but certainly it would be good to see the economy growing and that means more sales, more business,” he added.

The stubborn unemployment numbers dwarf any other economic statistics in the eyes of the American people. And as well they should; job security is inseparable from economic security. The Federal Reserve chair, then, concedes that job growth won’t be at an acceptable level, but the only time he ever talks about fiscal policy that would counteract that, he mentions dealing with the deficit, which would end up contractionary and harmful to job growth.

This is a critical moment for the unemployment crisis. After a tick downward, first-time jobless claims hiked back up last week. Increases in commodity prices like food and oil, which are tied more to global growth than inflationary by-products of monetary policy, are starting to be worthy of conversation as a net lag on the economy. The economic indicators remain mixed at best, and at the top, people still need jobs.

A modicum of urgency would be nice.

“It’s not going to happen overnight,” he said. “The economy’s got to come back. Confidence has to come back.”

On the current credit squeeze, the Fed chairman said there has to be a balance between banks being cautious with lending and small businesses that are unable to get credit.

“We got into trouble in the first place by making too many bad loans,” he said. “So you have to make good loans. And you have to have credit-worthy borrowers. But we can do that by putting in the effort.”

Bernanke cited community banks, which have stepped in to make loans that big banks aren’t willing to make.

“One of the advantages of community banks is that they have long-standing relationships,” he said. “They understand the business better. They know the people. That’s one reason why community banks have stepped into the breach…There are substitutes for lazy lending, which is the hard work of understanding the business.”

RELATED LINKS
Job Outlook Improving: FedBair: Time To Accept Dodd-FrankDodd-Frank Creates More Uncertainty: Rep. BachusLack of Credit Leads Some Borrowers to Controversial Payday LendersBanks CEOs Battle for AIG
Bernanke’s comments came a day after after the Federal Reserve said the battered U.S. labor market may finally be looking up.

The Fed’s Beige Book, based on anecdotal reports from the business contacts of the central bank’s regional branches, painted an increasingly bright, if cautious, picture.

The findings were consistent with a recent pick-up in U.S. economic data that has prompted some economists to beef up their forecasts for growth in the first half of 2011.

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David Dayen

David Dayen