“The recovery of the US economy continues, but the pace of expansion has been uneven and modest by historical standards,” is how Bernanke started off his testimony in front of the House. He noted the recent “positive developments in the labor market” but said “notwithstanding the better recent data, the job market remains far from normal: The unemployment rate remains elevated, long term unemployment is still near record levels and the number of persons working part time for economic reasons is very high.” He went on talking about the economy, is little worried about inflation even with the recent rise in energy prices and called the ECB’s LTRO program “constructive.” He then talked about the Fed’s new transparency goals and inflation target and said with respect to current policy, “with the unemployment rate elevated and the inflation outlook subdued, the Committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives.” Bottom line, while Bernanke acknowledges the better labor market (as we’ve all seen) there is no new news in the testimony as the Fed continues to embark on Defcon 1 monetary policy even though we are so far past the emergency. Keeping rates too low for too long in the mid 2000’s created ‘you know what’ and the Fed is repeating the exact same policy mistakes now.
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