Bernanke Got It Right on ‘Far from Normal’ Jobs Market

Pronouncements by Federal Reserve Chairman Ben Bernanke just a few days ago that doused visions of a rosy jobs market apparently came true this week with a release of the first disappointing unemployment report in months.
In a March 26 speech, Bernanke said that despite recent gains in the overall employment picture, the jobs market is out of synch with the rest of the economic recovery components.
“The job market remains far from normal,” the Fed chief said before the National Association for Business Economics Annual Conference in Washington, D.C., his words resonating throughout Wall Street and Main Street.
On Friday, the Labor Department said employers in the U.S. added 120,000 jobs in March, the fewest in five months. The unemployment rate fell to 8.2 percent from 8.3 percent the month before primarily because more people stopped looking for work.
The March figures followed the most robust six months of job growth since 2006.
“Chairman Bernanke should be putting out the world’s biggest ‘I told you so,’” Phillip Swagel, an economist at the University of Maryland and former assistant Treasury secretary in George W. Bush’s administration, told Bloomberg.
After nearly two years of job gains, private payroll employment remains more than 5 million jobs below its previous peak, Bernanke said in the March 26 speech.
“The jobs shortfall is even larger, of course, when increases in the size of the labor force are taken into account,” Bernanke said. “And the unemployment rate in February was still roughly 3 percentage points above its average over the 20 years.”
Economists interpret Bernanke’s comments as signaling no change in the central bank’s interest rate posture for the foreseeable future.
The Fed has said it would hold its benchmark federal funds rate at zero to .25 percent “at least through late 2014.”
Read the full text of Bernanke’s speech.

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