I don’t think Federal Reserve Chairman Ben Bernanke was watching the Republican National Convention last week–he had a big speech of his own to prepare—but he seems to agree with Republican presidential nominee Mitt Romney and vice-presidential pick Paul Ryan on one important point: The economy stinks.
In a high-profile paper he delivered at the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming Friday, Chairman Bernanke gave a vigorous defense of the unconventional methods the Fed has used to combat the Great Recession. But despite all his efforts, he concedes, the state of the economy—and especially the labor market– is pretty miserable:
The unemployment rate remains more than two percentage points above what most [Fed governors] see as its longer-run normal value, and other indicators–such as the labor force participation rate and the number of people working part time for economic reasons–confirm that labor force utilization remains at very low levels. Further, the rate of improvement in the labor market has been painfully slow.
That’s essentially what Romney said in his acceptance speech Thursday night:
In the richest country in the history of the world, this Obama economy has crushed the middle class. Family income has fallen by $4,000, but health insurance premiums are higher, food prices are higher, utility bills are higher, and gasoline prices have doubled. Today more Americans wake up in poverty than ever before…His policies have not helped create jobs, they have depressed them.
And here was Paul Ryan last Wednesday:
Right now, 23 million men and women are struggling to find work. Twenty-three million people, unemployed or underemployed. Nearly one in six Americans is living in poverty. Millions of young Americans have graduated from college during the Obama presidency, ready to use their gifts and get moving in life. Half of them can’t find the work they studied for, or any work at all….
The difference in tone is obvious, of course– Bernanke’s combination of Fedspeak and dry academic lingo versus Romney and Ryan’s high-flown political rhetoric. But the sentiment is the same, and so, to some degree, is the diagnosis. Here’s Bernanke:
Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time.
And Romney and Ryan’s economic plan is based on boosting growth enough to create 12 million jobs over the first term of a Romney presidency.
That’s where the similarity stops. Romney and Ryan blame the jobs crisis almost entirely on President Obama’s lack of leadership. Bernanke cites continued weakness in housing, restrictive fiscal policy, continued “stresses in credit and financial markets,” and the European financial crisis as “headwinds” that have kept growth subdued. I mostly agree with Bernanke, but the leadership issue can’t be discounted.
Still, it’s pretty striking how much Bernanke agrees with Romney and Ryan, who have pledged not to reappoint him as Fed chairman if they are elected in November.