US Federal Reserve Chairman Ben Bernanke says the US job market isn’t as strong as the steadily declining unemployment rate might suggest.
Responding to questions at a Senate hearing on Tuesday, he said the unemployment rate doesn’t capture the plight of millions of Americans who have stopped looking for work or part-timers who can’t find full-time jobs.
His cautious view helps explain why the Federal Reserve plans to hold interest rates at record lows until late 2014.
Photo: Bloomberg
Many economists were looking to see if Bernanke might waver on that stance after Friday’s news that hiring surged last month and the unemployment rate to a three-year low of 8.3 percent.
The Fed chairman stuck with the three-year time line.
None of the senators asked Bernanke whether the encouraging job figures were reason enough for the Fed to rethink holding interest rates low for that long.
And Bernanke didn’t tout the hiring data during the two-hour hearing.
If anything, Bernanke maintained the Fed’s position: The economy is improving at a frustratingly slow pace and that low rates are necessary to boost growth.
Bernanke agreed with Republican Senator John Cornyn that an unemployment rate of 8.3 percent is understating the jobs problem.
“It’s very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” he said.
“There are also a lot of people who are either out of the labor force because they don’t think they can find work … There are also a lot of people who are working part-time, and they’d like to be working full-time, but they can’t find full-time work,” he said.
The Fed has kept its benchmark interest rate near zero for the past three years.
In its policy statement last month, the Fed said it would probably not increase that rate until late 2014 at the earliest — a year and a half later than it had previously said.
During the hearing, Republicans repeated familiar concerns.
They said keeping rates down could raise the risk of inflation. And low rates punish traditional savers.
Bernanke said Fed officials were aware of the risks and were closely monitoring inflation, which he said was low and falling.
The Fed last month set an annual inflation target of 2 percent. Inflation in the October-December quarter last year was below that target.
“Given that inflation is close to target, I don’t think we would be doing radically different things at this point in time with a single mandate,” Bernanke said.
On Friday, the government said employers added 243,000 jobs last month, far more than expected. And unemployment fell for a fifth straight month, to 8.3 percent. Still, 8.3 percent is still painfully high. Nearly 13 million people remain unemployed.
Much of the hearing focused on the nation’s high budget deficits. Bernanke urged senators to resolve debates over tax cuts that expire this month and at the end of the year, saying uncertainty around both could slow the economy.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Elon Musk’s lieutenants have reached out to chip industry suppliers, including Applied Materials Inc, Tokyo Electron Ltd and Lam Research Corp, for his envisioned Terafab, early steps in an audacious and likely arduous attempt to break into the production of cutting-edge chips. Staff working for the joint venture between Tesla Inc and Space Exploration Technologies Corp (SpaceX) have sought price quotes and delivery times for an array of chipmaking gear, people familiar with the matter said. In past weeks, they’ve contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools, according to the people, who asked not to
RSS