In the beginning of this month, Federal Reserve Chairman Ben Bernanke released a statement that was a bit harsh to listen to. In somewhat of a quickfire fashion, Bernanke ran down the list of things that our country still must improve upon before we can say that we are recovered or even close to recovered. Back at it again, Bernanke recently discussed how fragile our economy and job market really is and that cyclic patterns are to blame for the slow recovery in a speech to the National Association for Business Economics on Monday.
According to the Guardian, this year has already seen a 245,000 average jobs gain for the past three-months and the number of people applying for unemployment benefits fell to the lowest numbers we have seen since 2008. He was quoted saying, “We have seen some positive signs on the jobs front recently, including a pick-up in monthly payroll gains and a notable decline in the unemployment rate. That is good news. At the same time, some key questions are unresolved.” So what must still be improved upon in order for us to truly reach recovery status?
Bernanke believes that the number of people working in our country as well as the number of hours people are working are still significantly low. In fact, they are way below pre-recession levels. “Notwithstanding these welcome recent signs, the job market remains quite weak relative to historical norms. After nearly two years of job gains, private payroll employment remains more than 5 million jobs below its previous peak.” If we want to truly say that we are close to recovery, than we are going to have to fill many more jobs than we have already. Furthermore, Bernanke was very concerned for those that were unemployed for more than six months.
The number of people that have been unemployed for more than six months has been significantly higher than 40 percent since 2009, reports the Guardian. If you look back at the recession we faced in the early eighties, this number never exceeded 25 percent. With this number being so high, there is still much cause for concern. To top this number off, even though the unemployment rate has dropped significantly over the past year, the number is still 3 percent above the average unemployment rate we saw for the 20 years before the Great Recession. In fact, Bernanke states that most of the improvements seen in the job market can be attributed to less lay-offs rather than more hiring.
He states that the majority of hiring that has taken place as of late can be attributed to the fact that companies laid-off too many workers in the beginning of the recession and have since then had to refill those positions in order to meet their demands. This shows that their aren’t many new jobs being added, but rather past positions being refilled.
We can definitely always count on Bernanke to deliver a dose of reality in terms of the job market and unemployment. Aside from reiterating the fact that the job market is not up to par, Bernanke reminds us that even though reports may be overly optimistic, we have to look at this situation from all sides. When you compare where we are now to where we were for virtually 20 solid years before the recession, we are still in a world of hurt.
What do you think about Bernanke’s ideas and statements? Optimism can have very large benefits. Do you think it’s better to focus on how we are improving rather than focus on what we still need to fix?