Thread: FED CHAIR BERNANKE NOT SO CHEERY

Housing, Healthcare costs, low savings rates, were some of the topics spoken of by the Fed. Chairman Bernanke today.

He also talked of America changing to service oriented jobs, employment.

Stocks then made a "little" adjustment.

March 28, 2007

Fed Chairman Says ‘Uncertainties’ Have Grown

By EDMUND L. ANDREWS

WASHINGTON, March 28 — The chairman of the Federal Reserve acknowledged today that “uncertainties” about the economic outlook have “increased somewhat in recent weeks” and that “turmoil” in the market for subprime home mortgages has created “severe financial problems for many individuals and families.”

But Ben S. Bernanke, the Fed chairman, reiterated in testimony before the Joint Economic Committee of Congress his broadly sanguine view that the United States economy was likely to expand at a moderate pace this year and that inflation was likely to slightly decline.

“The uncertainties around the outlook have increased somewhat in recent weeks,” Mr. Bernanke said. But in his prepared testimony, Mr. Bernanke offered little indication that he wanted to clamp down more tightly on subprime mortgage lenders, which lend money to people with poor credit, or on what a growing number of Democrats view as predatory mortgage lending practices.

“Thus far, the weakness in housing and in some parts of manufacturing does not appear to have spilled over to a significant extent to other sectors of the economy,” Mr. Bernanke said.

Mr. Bernanke said financial institutions were already tightening their lending standards, which would eventually help reduce the current glut of unsold homes on the market. But in the short term, he cautioned, tougher lending standards could further reduce the demand for housing and aggravate the bloated inventories of unsold homes.

Democrats and Republicans on the committee greeted Mr. Bernanke with blunt expressions of worry, particularly about the housing market.

“This is a terrible instance where a lack of oversight has led to a Wild West mentality among unscrupulous lenders and, frankly, the exploitation of large numbers of financially unsophisticated borrowers,” said Senator Charles E. Schumer of New York, the committee’s chairman.

Representative Carolyn B. Maloney, Democrat of New York, predicted a “tsunami” of defaults and foreclosures among overstretched homeowners. And Senator Jim Saxton, Republican of New Jersey, said “the possibility of policy mistakes undermining economic growth cannot be dismissed lightly.”

Mr. Bernanke essentially confirmed that the Fed, taking note of the increased economic uncertainty, was taking a more open mind about its past predisposition toward raising interest rates rather than lowering them.

He repeated the Fed’s statement after last week’s policy meeting that worries about rising inflation remained the central bank’s “predominant” concern. He noted that the core measures of consumer prices, excluding energy and food, were “somewhat elevated” and were 2.7 percent above their level one year ago.

The Federal Reserve’s unofficial comfort zone for inflation is between 1 and 2 percent a year.

http://www.nytimes.com/2007/03/29/busin ... eb.html?hp


This is an older article.

So he's letting U.S. workers know that more pain is likely, but in the end we''ll have a world with improved productivity and better living standards for all. I hope the U.S. families now suffering from job loses directly related to global integration will see some relief shortly as the powers that be move toward global integration. (snip)

http://www.bloggingstocks.com/2006/08/2 ... etraining/

Stocks fall as Fed chief says inflation still a big problem
By Tim Paradis, Associated Press
NEW YORK — Stocks fell further Wednesday as Federal Reserve Chairman Ben Bernanke appeared to chide investors who may have looked past concerns about inflation following Fed comments last week. The Dow Jones industrials at times fell more than 100 points.

In testimony before the congressional Joint Economic Committee, Bernanke said while core inflation slowed "modestly" in the second half of 2006, recent readings remain "uncomfortably high." He also said an implosion among some mortgage lenders that cater to those with poor credit doesn't appear to have spread to the broader economy, though he added that the situation warrants further observation.

Stocks rallied last week after investors interpreted language from the Fed as opening the way to the possibility of a reduction in interest rates. But concerns about stubborn inflation could upend investors' hopes for a reduction in rates, even as the economy continues to cool.

"I think what the Fed is trying to tell us is that it is between a rock and a hard place. And when you're between and a rock and a hard place you just can't move," said Drew Matus, senior economist at Lehman Bros. Holdings Inc.

In midday trading, the Dow industrials fell 54.71, or 0.4%, to 12,342.58. The Dow had been down about 140 points. Broader stock indicators also fell. The Standard & Poor's 500 index fell 4.48, or 0.3%, to 1424.13, and the Nasdaq composite index fell 9.10, or 0.4%, to 2428.33.

Bernanke's testimony before Congress' Joint Economic Committee on the country's economic outlook comes a day after renewed concerns about the housing market helped send stocks lower.

The Dow Jones industrials had their biggest pullback in two weeks Tuesday after a report showing a drop in prices of single-family homes had investors theorizing that the housing market might continue to sour and hurt consumer spending.

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http://www.usatoday.com/money/markets/2 ... -wed_N.htm

Originally Posted by GeorgiaPeach

“Thus far, the weakness in housing and in some parts of manufacturing does not appear to have spilled over to a significant extent to other sectors of the economy,” Mr. Bernanke said.

Just wait Mr. Bernanke, this "spillover" (recession) is coming soon.