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Bernanke fears of high unemployment for years to come

Published time: August 31, 2012 17:57
Edited time: August 31, 2012 21:57
Chairman of the US Federal Reserve Ben Bernanke.(AFP Photo / Saul LOEB)

Chairman of the US Federal Reserve Ben Bernanke.(AFP Photo / Saul LOEB)

During the Fed’s annual address from Jackson Hole, Wyoming, US Federal Reserve Chairman Ben Bernanke said current economic conditions are setting America up for “daunting” challenges and continued grim employment numbers.

Friday morning, the overseer of America’s central bank said during the Fed’s annual symposium that “we must not lose sight of the daunting economic challenges that confront our nation,” suggesting that as the country assesses the benefits and costs of alternative policies, the outcome might worsen nevertheless.

Mr. Bernanke also insisted that the current unemployment epidemic that has haunted the length of much of President Barack Obama’s administration may extend into the unforeseeable future if changes for the better aren’t implemented soon.

"The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years," Bernanke said.

As grim as the chairman’s predictions are, that isn’t to say they are out of character. Although the Fed does not regularly make public addresses about the country’s economic status, Bernanke has brought up his fears of a recession repeatedly in 2012 alone.

In June, Bernanke told lawmakers on Capitol Hill that any lack of initiative on their part would push the rest of the country over a proverbial fiscal cliff. One month later, the chairman warned Congress, “We are looking very carefully at the economy, trying to judge…whether or not the economy is likely to continue to make progress towards lower unemployment,” which, he added, would “obviously” prompt the Fed to intervene with additional steps to help any attempts at recovery.

On Friday, Bernanke once more said that the Federal Reserve was concerned and that they’d be considering additional action, although he failed to officially endorse a third round of quantitative easing, despite persistent predictions from economists that the Fed will argue for such.

“Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” Bernanke said from Jackson Hole.

The Fed will meet against on September 12, and are expected to discuss if QE3 will have to be implemented then.

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