Ben Bernanke, chairman of the Federal Reserve, has declared our unemployment situation a national crisis according to an article in Bloomberg by Joshua Zumbrun and Vivien Lou Chen. The American unemployment rate is still hovering between 9% and 10% and has been for the last few years. Worst of all, 45% of those unemployed have been without work for more than 6 months.
While monetary policy does not cure the problem, the Federal Reserve purchased $2.3 trillion in assets since 2008 in an effort to bolster the economy and keep interest rates low. The current proposal is to actively push down long term interest rates to further reduce borrowing costs. Bernanke suggested we follow the financial success of some of the emerging market economies like Brazil, Russia, India and China with “disciplined fiscal policies”. Their policies of encouragement of private capital formation, open trade, investment in education, technological advances and a regulatory framework that encourages economic progress, have provided 85 percent of global growth during our recession.
Consumer confidence has also dealt a severe blow by the recession and resulting unemployment. In a recent USA TODAY/Gallup Poll, consumer pessimism is increasing. Businesses will not expand until demand picks up and demand will not pick up until there are more jobs. The International Monetary Fund agreed with the trend as they recently downgraded the economic outlook for the United States with a growth projection of under 2% through 2012.
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