Bernanke on Jobs

After a few months of strong job growth Chairman Ben Bernanke is calling for caution and maybe even signaling that that Federal Reserve will act in a bigger way to help support the economy. 

The real interesting portion of Bernanke's comments was his comments on why job growth may be accelerating. He talked a little bit about how job growth should be a little lower when the economy is growing at 2% or 3%, yet job growth is happening at a level ordinarily associated with higher growth levels. His rationale is that companies may be compensating for over cutting their workforce as the recession accelerated in the Fall of 2008 and early 2009.

If this is the case we can expect job growth to slow noticeably sometime in the next 3 to 6 months unless some outside factors help the economy along. Fed action would certainly help keep the economy moving, as would a substantial decline in oil prices which would be a quasi tax cut for American consumers. Additionally but far less likely, Congress could take action to reform corporate or personal income taxes. Congress could also halt government layoffs which numbered over 1 million lat year, or could fully fund infrastructure spending to get construction workers back on the job while rebuilding the circulatory system of the American economy. 

Here hoping that our economic luck this year is better than last, but everyone should listen closely to the Chairman's words because without action job growth could stall again. 

More to come on jobs....