The devil’s in the details
Federal Reserve Chairman Ben Bernanke issued a not-so-gentle reminder last week in explaining the Federal Open Market Committee’s decision to stand pat, again, on artificially very low interest rates. Despite protests from the White House that our economy is on the rebound – that we have turned a corner – the devil is in the details. And the FOMC makes a thorough study of those details.
Though we may not all agree on the merits of meddling with the health of the national economy by wielding the tools at the FOMC’s disposal, it is important to understand why Bernanke and company feel the need to do so.
Bernanke explained to Congress the much-ballyhooed stock market surge of recent weeks is misleading. When adjusted for inflation, the major indexes are still off their peaks.
Unemployment in the U.S. is still near 8 percent. In fact, the most recent figures for initial claims for jobless benefits ticked up to 336,000 in a week, from 334,000 the week before. Many economists agree a good deal of any decline in the unemployment rate can be attributed to workers simply dropping out of the job market.
Even claims that the housing market is on an upswing deserve a bit of scrutiny.
According to the Federal Housing Finance Agency, home prices increased less than economists hoped for in January.
Most Americans are still painfully aware of the state of our economy. Reminders like Bernanke’s will be enough to keep the rest of Washington, D.C., from believing the situation has improved just because they tell us it has.