Federal Reserve Chairman Ben Bernanke, in his semi-annual testimony before Congress, said reducing the ranks of the unemployed will be “frustratingly slow.” The unemployment rate has been above 8 percent since February of 2009. The official unemployment rate in June was stuck at 8.2 percent.
But consider this: The Bureau of Labor Statistics U-6 measure counts the “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.” Translation: This measure includes those working part-time when they want full-time employment, and the short-term discouraged workers. This broader measure stood at 14.9 percent in June. That’s pretty bad, Mr. Chairman.
Yet the official numbers, even U-6, have long been criticized for understating real unemployment, especially after a change in 1994 that narrowed the broader measure to only include short-term discouraged workers. That’s where Shadow Government Statistics comes in. This private firm includes the long-term discouraged who would like work but have stopped looking and the unemployment rate is 22.9 percent. Mr. Chairman, that’s Great Depression territory.
Bernanke’s line about the central bank “standing ready” is wearing thin amid this jobs crisis. Unemployed Americans know that the Fed bailed out the big banks, Wall Street and politically connected grifters whose poor judgment and frauds that brought on the Great Recession even if they don’t realize the specifics: $16 trillion in emergency lending and trillions more at risk from assorted guarantees and “facilities.”
The irony, as Paul Krugman pointed out, is that Chairman Bernanke is failing to heed the advice of Professor Bernanke, when he was criticizing the excessive caution of the Bank of Japan in 2000. The Fed is not out of options. It just won’t act. Meanwhile, it’s darkly entertaining to watch lawmakers demand Fed action when they won’t use fiscal policy to address the unemployment crisis. Pot, meet kettle. Anyway, they’ve all got jobs. What crisis?
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Today’s Econ Haiku:
Out in the barnyard
Searching through the herd to find
A Libor scapegoat