Calling Dr. Bernanke. Federal Reserve Chairman Ben Bernanke testified before the Senate Budget Committee on Tuesday, telling lawmakers that the job market is still far from healthy after signs of economic improvement over the past year.
After asking lawmakers to reduce the long-term budget, Bernanke said, “We still have a long way to go before the labor market can be said to be operating normally,” echoing testimony he gave on Feb. 2 to the House Budget panel. “Particularly troubling is the unusually high level of long-term unemployment.”
The jobless rate unexpectedly fell to 8.3% in January. Bernanke’s testimony on Tuesday, according to Bloomberg, “indicated that his views on the health of the labor market haven’t changed, even though he didn’t refer to the January data. The economy added 243,000 jobs last month, exceeding the most optimistic forecast in a Bloomberg News survey of economists.”
The unexpectedly rosy report has economists rethinking their largely pessimistic outlooks for the year. The report also fueled suspicion from Administration critics over its accuracy.
“Unfortunately, these numbers cannot hide the fact that President Obama’s policies have prevented a true economic recovery. We can do better,” GOP presidential contender Mitt Romney said in a statement from the Nevada caucuses.
Bernanke himself seemed to undermine the jobs tally, telling Senators the unemployment rate of 8.3% understates the weakness of the labor market. He said it’s important to also look at other gauges of the labor market, including underemployment, according to Bloomberg. While the jobless rate has dropped for five consecutive months, it remains above the 5.2% to 6% that Fed officials say is consistent with maximum employment. The percentage of the unemployed who have remained without work for 27 weeks or more rose to 42.9% in January from 42.5% in December.
“Over the past two and a half years, the U.S. economy has been gradually recovering from the recent deep recession,” Bernanke said. “While conditions have certainly improved over this period, the pace of the recovery has been frustratingly slow, particularly from the perspective of the millions of workers who remain unemployed or underemployed.”