Wednesday, December 9, 2009
Bernanke cautious on 2010's economic growth
Federal Reserve Chairman Ben Bernanke warned that there is no certainty that the economy is on its long-lasting recovery. Even though we have seen some improvement and stabilization in economic activity, there is still a lot of work to do before we can be assured that “the recovery will be self-sustaining.” Ben Bernanke also encouraged stronger demand for homes and consumer goods and services, because it might be the key for future recovery and economic growth.
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4 comments:
Well,this is one of the things we have been talking about for a while. As a layman, we would tend to think that the whole stimulus plan and other economic measures would improve the economy immediately. However, if we do some study and look up historical figures, economic recoveries do not happen overnight or in a matter of months. You would see both good and bad signs for a while until the economy actually comes back on its feet. So yeah, we will have to give this recovery a reasonable amount of time.
I agree that the road toward full economy recovery will take more time, probably more than we all thought, but it is promising to see that last month only about 11,000 jobs were lost when we were predicting 140,000 which is an extraordinary difference. However, I do wonder how inflation will be avoided if the Fed is still adamant about keeping low rates.
I agree that economic recovery cannot improve right away and a lot of work is needed to bring in the recovery. Jobless rate will be around 9.3 to 9.77% by 2010 which is a decrease in jobless rate from 10% it does not seem like a huge change but as it is mentioned a change will take place slowly. The argument over inflation still remains a question.
In fact, one of the Fed's reports pointed out that the unemployment rate will reach the 4-5% level only in five to six years. No wonder that the recovery is taking so long. I think that this has a lot to do with consumer confidence. Currently, all conditions are met for the banks to provide liquidity and for people to spend money. However, there still is some credit crunch and we don't see as much spending. I believe that as soon as consumer confidence picks up, we are going to see a real improvement in the economy.
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