US Federal Reserve Chairman Ben Bernanke has a message for Congress: Do more to stimulate hiring and growth — or risk delaying the economy’s return to full health.
Bernanke held out the prospect on Friday that the Fed might take further steps later to help the economy, but he offered no new plans for now.
At a time when Congress has focused on shrinking budget deficits, Bernanke agreed that doing so is important for the long term. However, he warned lawmakers not to “disregard the fragility of the current economic recovery.”
Investors had hoped Bernanke would use his much-anticipated speech at an economic conference in Jackson Hole to unveil some aggressive measure to jolt the economy.
He did not. However, he did say the Fed’s policy meeting next month will be extended to two days, instead of the scheduled one, to permit a “fuller discussion” of the central bank’s options.
“He appears to be saying that the Fed has largely played its part and that the politicians need to step up their game,” said Paul Dales, senior US economist at Capital Economics.
Investors seemed to take comfort from Bernanke’s view that the job market and the economy will return to full health in the long run and the notion that the Fed might provide more help in the future. After initial losses, the Dow Jones industrial average closed up 134 points. Broader stock indexes also gained.
Bernanke’s speech came shortly after the government said the economy grew at a scant 1 percent annual rate in the April-June quarter — even slower than previously estimated.
The economy is still hobbled by a depressed housing market, high oil prices and fears that the European debt crisis will deteriorate into a repeat of the 2008 financial crisis. The Dow has lost about 11 percent of its value since late July on fears that the economy might slip back into recession.
On Friday, Bernanke blamed this summer’s political squabbling over raising the federal debt limit for undermining consumer and business confidence. And he warned that further gridlock in Washington would “pose ongoing risks to growth.”
The Fed chief said that the depressed housing sector has delayed a full recovery in the broader economy. He said the home market should gradually return to health — a process he said the government should support.
In his speech in Jackson Hole a year ago, Bernanke signaled that the Fed would begin a new round of Treasury bond purchases to try to lower long-term interest rates, spur spending and boost the stock market. His words ignited a 28 percent, eight-month rally in the Dow.
This time, Bernanke merely repeated that the Fed “has a range of tools that could be used to provide additional monetary stimulus.”
The most powerful weapon the Fed has left would be a third round of bond purchases. Critics, from congressional Republicans to some Fed officials, have raised concerns that the Fed’s Treasury purchases could ignite inflation and speculative buying on Wall Street, while doing little to aid the economy.
Bernanke pushed back against that notion in his speech. He said that with oil and other commodity prices easing, he expects long-term inflation to remain low well into next year.
Others have questioned whether any further lowering of long-term rates is needed. Investors seeking the safety of US debt have forced down the yield on the 10-year Treasury note to 2.19 percent — a full point lower than it was when the Fed completed its Treasury purchases about two months ago. Yet the economy is still sputtering.
The Fed also could take more modest steps. It could eliminate interest payments on money that banks keep on deposit at the Fed, encouraging them to make loans instead. Or it could reshuffle its portfolio of investments, replacing shorter-term bonds with longer-term ones to help push down long-term interest rates.
Aneta Markowska, senior US economist at Societe Generale, said the extension of the Fed’s meeting next month to two days suggests the possibility that it could unveil a new program soon.
Roberto Perli, a former Fed official who is a managing director at International Strategy & Investment, said Bernanke and other Fed policymakers are waiting to see if the economy improves in the current quarter.
Chief economist John Silvia at Wells Fargo, suggested that Bernanke would have to overcome opposition within the Fed to take any further bold steps to lift the economy. Earlier this month, three of the 10 members on the Fed’s policy committee voted against Bernanke’s plan to keep short-term rates near zero through mid-2013.
Because of that rare level of dissent, Silvia doubts that Bernanke could muster support for a third round of Treasury purchases.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”