Fed chairman says ‘unemployment will remain stubbornly high for several years’

July 21, 2010 by · Leave a Comment
Filed under: Economic News 

Well you have it from the proverbial horses mouth in Ben Bernanke, our Federal Reserve Chairman.  It does not bode well for the U.S. economy when the head of our central bank tells us that we should expect high unemployment for the next several years.  On a political note, that is going to make this election cycle and the 2012 presidential election far from certain.

When the economy is going south, it makes it easier for a new candidate to make promises of a better economic environment even if they can not deliver.  Bernanke said we will still be between 7-7.5% in 2012 for our percentage of unemployed population.  We also need to take account for discouraged workers that will also come back on the rolls and possible push that statistic even higher.

This is also a best case senario, we need to take into account that a double-dip recession is not out of the cards either.  I have to tip my hat to Ben for atleast giving us a realistic picture and not telling us our economy through rose colored glasses.

LA Times – Federal Reserve Chairman Ben S. Bernanke painted a generally downbeat picture of the U.S. economy Wednesday, saying the overall outlook is “unusually uncertain” and predicting that unemployment will remain stubbornly high for several years.

Slowly improving consumer and business spending will help the economy grow 3% to 3.5% this year and 3.5% to 4.5% in each of the next two years, Bernanke told members of the Senate Banking Committee in his semiannual testimony to Congress.

But it will take “a significant amount of time” to reclaim the 8.5 million jobs lost during the recession, he said. The national unemployment rate, currently 9.5%, is expected to decline only to 7% to 7.5% by the end of 2012, Bernanke said.

“Nearly half of the unemployed have been out of work for longer than six months,” Bernanke said. “Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers’ employment and earnings prospects.”

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