Fed Shifts Focus to Employment

Joblessness mars Bernanke’s record as the Fed chairman testifies before Congress.

Joblessness is the blemish on Ben S. Bernanke’s report card.

Since the recession ended in June 2009, the Federal Reserve chairman has achieved inflation near his target of 2 percent, bolstered capital across the banking system and helped underpin confidence in the U.S. economy that’s contributed to record-low borrowing costs for the nation. Meanwhile, the unemployment rate has stalled above 8 percent for 41 consecutive months.

‘Lasting Effect’

Economists Carmen Reinhart and Kenneth Rogoff found a “deep and lasting effect” of financial crises on output, employment and asset prices in their 2009 book “This Time Is Different: Eight Centuries of Financial Folly.” The authors traced similarities among such crises in 66 countries dating back to medieval times, including sovereign defaults, banking panics and inflationary surges.

Sparking Criticism

Bernanke’s actions also have sparked criticism from both ends of the spectrum: Republicans including House Speaker John Boehner of Ohio warn the stimulus risks accelerating prices, while Nobel-prize winning economist Paul Krugman argues Bernanke hasn’t done enough to create jobs and should tolerate higher inflation.

Lacking Skills

Some policy makers within the Fed have argued that monetary stimulus isn’t effective at creating jobs, suggesting that people who lost work during the recession don’t have the skills to qualify for openings being created. Philadelphia Fed President Charles Plosser said May 1 that “solutions to this problem are not amenable to monetary-policy fixes.”

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