My calendar this morning:
- 0800: Curl up into a ball on the floor
- 0830: Whimper
- 0900: Lapse into catatonia
- 0930: Revert to whimpering
- 1000: Sobbing
- 10:30: Return to catatonia
BEN BERNANKE is on Capitol Hill today, providing his semi-annual commentary on the state of monetary policy. The backdrop for this testimony is as dark as it's been in some time. We would expect the American economy to manage trend growth in nominal output of about 5%… 3% real annual GDP growth and 2% annual inflation, give or take. In the 11 quarters since the end of the recession, NGDP growth has come in at more than a 5% annual rate only twice…. [W]e would expect consistent above-trend growth during the recovery to make up some of the lost ground.
In the first quarter of 2012, NGDP grew at a 3.9%…. Tracking estimates… for the April-June period… an NGDP growth rate of no more than 1.5%…. Mr Bernanke's testimony says as much:
The pace of economic recovery appears to have slowed during the first half of this year, with real gross domestic product (GDP) likely having risen at only a modest pace. In the labor market, the rate of job gains has diminished recently, and, following a period of improvement, the unemployment rate has been little changed at an elevated level since January…. With the unemployment rate expected to remain elevated over the projection period and ination generally expected to be at or under the Committee’s 2 percent objective, most participants expected that...the federal funds rate would remain extraordinarily low for some time...In addition to projecting only slow progress in bringing down unemployment, most participants saw the risks to the outlook as weighted mainly toward slower growth and higher unemployment.
Mr Bernanke ought to be brimming with apologies for such miserable performance. Instead, he simply notes:
The Committee again stated that it is prepared to adjust the size and composition of its securities holdings as appropriate to promote a stronger economic recovery in a context of price stability...
One might expect the chairman's Congressional audience to respond by saying, "Wait, the committee believes that it could take additional action and that such action would promote a stronger recovery and sustained improvement in labour market conditions? What in heaven's name are you waiting for?… [W]e can blame our abysmal performance on partisan polarisation and the filibuster! What's your excuse?"