BERNANKE: UNEMPLOYMENT MAY TAKE 5 YEARS TO GET BACK TO “NORMAL”
December 06, 2010
(NATIONAL) -- The keepers of the numbers tell us the worst economic setback since the Great Depression ended in 2009.
Fed Chairman Ben Bernanke: it may take 5 years to get unemploymet down to "normal." CLICK TO ENLARGE
Yet here the nation is with “official” unemployment at close to 10% with the year 2010 coming to an end and the real street level number closer to 14-15% and higher among people of color.
This is the jobless recovery in full bloom and anyone looking to Federal Reserve Chairman Ben Bernanke for a glimmer of hope that America will get back to “normal” unemployment levels anytime soon will be disappointed.
In a rare interview broadcast Sunday on the CBS magazine show “60 Minutes,” Bernanke said U.S. unemployment may take a long time to fall to a normal level adding, "At the rate we're going, it could be four, five years before we are back to a more normal unemployment rate" of about 5 to 6 percent.”
The unemployment rate last month rose to 9.8 percent, the highest level since April and the economy, which grew 2.5 percent in the third quarter, is so weak that Bernanke said growth could falter out without support.
And that is why he went on 60 Minutes; to defend and explain the central bank's announcement that it will purchase $75 Billion in Treasury securities a month through June to prop up a tepid recovery that produced only 39,000 jobs.
Bernanke says the propping up is indeed necessary contrary to what his critics say.
"It's very close to the border," Bernanke said of the economy. "It takes about 2.5 percent growth just to keep unemployment stable and that's about what we're getting. We're not very far from the level where the economy is not self-sustaining."
Bernanke said one of things that really concerns him is that 40% of the unemployed have been out of work for six months or longer, “And that’s unusually high,” said Bernanke.
Without action by the central bank, Bernanke said, the economy might have tipped into a period of deflation -- a prolonged drop in prices.
A silver lining in all this? Bernanke said a return to a recession "doesn't seem likely" because sectors of the economy such as housing can't get much more depressed.
If you can call that a silver lining.