Bernanke Says Fed Must Monitor Inflation ‘Extremely Closely’
Bloomberg | Apr 5
Federal Reserve Chairman Ben S. Bernanke said policy makers must watch inflation “extremely closely” for evidence that rising commodity costs are having more than a temporary impact on consumer prices. “So long as inflation expectations remain stable and well anchored” and the rise in commodity prices slows, as he’s forecasting, then “the increase in inflation will be transitory,” Bernanke said yesterday in response to audience questions after a speech in Stone Mountain, Georgia. “We have to monitor inflation and inflation expectations extremely closely because if my assumptions prove not to be correct, then we would certainly have to respond to that and ensure that we maintain price stability,” he said.
Will The Surge In Corporate Profits Bring Stronger Job Growth?
Corporate profits have soared since the Great Recession was formally declared at an end as of June 2009. Employment, by contrast, has had a tepid recovery. Is this a mismatch with legs? Or is job growth finally set to impress the crowd?
Book Bits For Saturday: 4.2.2011
● Government’s Place in the Market
By Eliot Spitzer
Summary via publisher, Boston Review Books
As New York State Attorney General from 1998 to 2006, Eliot Spitzer successfully pursued corporate crime, including stock price inflation, securities fraud, and predatory lending practices. Drawing on those experiences, in this book Spitzer considers when and how the government should intervene in the workings of the market. The 2009 American bank bailout, he argues, was the wrong way: it understandably turned government intervention into a flashpoint for public disgust because it socialized risk, privatized benefit, and left standing institutions too big to fail, incompetent regulators, and deficient corporate governance. That’s unfortunate, because good regulatory policy, he claims, can make markets and firms work efficiently, equitably, and in service of fundamental public values.
March Performance Review For The Major Asset Classes
The major asset classes generally posted respectable gains in March, although red ink spoiled the party for foreign developed-market stocks and REITs. U.S. bonds overall managed to rise, but just barely, based on the Barclays U.S. Aggregate Bond Index, which inched higher by less than 0.1% last month. Inflation-linked Treasuries, however, jumped 1%–the third consecutive monthly gain for TIPS and the highest return since last October, as per the Barclays U.S. Treasury TIPS Index.
Private Sector Jobs Rise by 230k In March
In line with expectations, private-industry nonfarm payrolls rose 230,000 in March, down slightly from the 240,000 net gain posted in February, the Labor Department reports. A respectable rise, to be sure. All the more so since the job growth for March represents the 13th straight month of improvement for the private sector. In addition, last month’s advance is near the highest level since the labor market started growing again in early 2010. But while those are all encouraging signs, we’re still left with the fact that job growth of 200,000-plus a month isn’t helping lower the still-elevated jobless rate. Unemployment was virtually unchanged in March, inching down to 8.8% from 8.9% in February.
The Deflation Factor & Real Wages
Economist Bob Dieli of NoSpinForecast.com writes in to point out that the chart posted earlier today (reproduced below) that compares real (inflation-adjusted) wages with personal consumption expenditures was dramatically skewed in late-2008 and 2009 by the brief but potent round of deflation that hit the U.S. economy.
A Technical Detail On Calculating Real Wages
In an earlier post today, I published a chart that compares real (inflation-adjusted) personal consumption expenditures with real average hourly earnings for production and nonsupervisory workers. The goal, as explained in detail in Joseph Ellis’ book Ahead of the Curve
Jobless Claims Fall By 6k
For the third week in a row, and for only the sixth time since the Great Recession officially ended in June 2009, new weekly filings for jobless benefits are under the 400,000 mark on a seasonally adjusted basis, the Labor Department reports. Last week, initial claims slipped by 6,000 to 388,000. The four-week moving average of claims remains well under 400k as well, continuing a trend that’s been in place for over a month.
There’s Always A New Recession Lurking
Former Minnesota Gov. Tim Pawlenty and newly minted Presidential candidate thinks that a new recession is coming. He’s right, of course. There’s always a new recession coming. There have been 33 economic contractions in the U.S. since the mid-1800s, according to NBER, and it’s a safe bet that number 34 is waiting in the wings. As Richard Fisher, president of the Dallas Fed, recently remarked: “I devoutly hope our next downturn won’t come for quite some time, but it surely will come eventually.”
ADP: Private Nonfarm Payrolls Rise In March
U.S. private sector employment rose by a net 201,000 (seasonally adjusted) last month, according to this morning’s release of the ADP Employment Report. That’s slightly down from February’s 208,000 gain, although the message is clear: job growth rolls on, albeit at modest levels relative to what the economy needs to bring about a large and relatively quick drop in the still-elevated jobless rate.