Guy in Charge of Economy Has No Idea Why It's Getting Better
Fed Chief Ben Bernanke is dumbstruck by the decline of the U.S. unemployment rate in recent months, and can't explain why it's happening.
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At a Monday meeting of economists and academics, Bernanke said the drop in the unemployment rate from 9 percent to 8.3 percent was "out of sync" and a "puzzle" given that GDP growth hasn't changed much during the same time period. "The improvement in the labor market over the past year -- especially the decline in the unemployment rate -- has been faster than might have been expected, given that the economy during that time appears to have grown at a relatively modest pace," he told the National Association for Business Economics. "The combination of relatively modest GDP growth with the more substantial improvement in the labor market over the past year is something of a puzzle."
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Far from suggesting incompetence, it's actually pretty refreshing to hear the head of the U.S. central bank admit he doesn't know what's happening with the economy—an admission that stands in stark contrast to an election season where every candidate knows exactly what's going on with this $14 trillion behemoth and exactly how to fix it.
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"America is coming back," said President Obama at a recent campaign fundraiser in Texas, citing the addition of 429,000 manufacturing jobs in the past two years. "We fought for this change. We're going to protect this change." Unfortunately, his own fed chairman doesn't seem to have the same outlook on what's happening with what he called a "quite weak" job market. "We cannot yet be sure that the recent pace of improvement in the labor market will be sustained," Bernanke said. "The number of people working and total hours worked are still significantly below pre-crisis peaks."
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The Republicans aren't any better when it comes to feigning omniscience of how the economy works. For Mitt Romney, the answers couldn't be simpler. "I understand what it is that fuels this economy; it’s freedom, economic freedom," he said at a recent campaign event in Maryland. "Virtually everything [President Obama is] doing is making it harder in this economy for people to get back to work." At the same time, he contrasted himself from his opponent Rick Santorum, dubbing him an "economic lightweight."
Surely, while Bernanke is undoubtedly a polarizing figure, few would call the Princeton economist an economic lightweight. And given that he's not sure what's causing the unemployment rate to go down, maybe we should just all take this election season's economy-speak with a larger dose of salt.
