Federal Reserve chairman Ben Bernanke called the domestic job market weak, despite a recent spate of hiring news. He also said the central bank’s existing policies will help boost economic growth, but that further “accommodative policies” may be needed.
Bernanke’s comments, delivered at the National Association for Business Economics spring conference in Arlington, Va., drove stocks higher by triple digits as of midday Monday, as the market interpreted his words to mean the Fed was likely to continue with its plan to keep short-term interest rates at current levels through 2014.
Though the job gains have helped support consumer confidence and incomes, "we have not seen that in a persuasive way yet," said Bernanke (left), according to The Associated Press. The Fed needs to "remain cautious" in deciding what its next moves should be, he said.
Employers added an average of 245,000 jobs a month from December through February. The unemployment rate has fallen to 8.3%, from a peak of 10.2% in October 2009.
Still, the economy grew at an annual pace of just 3% in the October-December 2011 quarter. And economists think growth has slowed in the January-March 2012 quarter to around a 2% annual rate, the AP notes.
Bernanke said the recent unemployment good news may simply have been an overreaction to previous layoffs. Employers may be hiring rapidly because they cut too many jobs during the recession. However, he conceded future government revisions may actually show stronger economic growth trends for 2011.
But the AP added that Bernanke cautioned he doesn't expect the unemployment rate to keep falling at its current pace without much stronger growth. He also noted that the rate is still roughly three percentage points higher than its average over the 20 years before the recession.
"Despite the recent improvement, the job market remains far from normal," Bernanke said. "The number of people working and total hours worked is still significantly below pre-crisis peaks."