10th September 2012
Disappointed, not only with Friday's jobs report but also with President Obama's speech to the Democratic National Convention, Robert Reich (referring to Obama's speech) writes: "At least he might have identified the scourge of inequality as a culprit [for high unemployment], for example, pointing out, as he did last December, that the economy can't advance when so much income and wealth are concentrated at the top that the vast middle class doesn't have the purchasing power to get it back on track."
Elsewhere, New York Times columnist Paul Krugman laments that the Republicans "obstruct and exploit" strategy for the failure to pass the President's American Jobs Act Bill (a combination of tax cuts and spending increases) which Krugman argues "would have been just what the doctor ordered" to boost employment, particularly at state and local government level.
Over at the Atlantic, however, Derek Thompson says despite everyone's eagerness to blame each other for the bad news, we have to remember that the news isn't really new. "Republicans will continue to blame Obama for failing to create the circumstances necessary for growth. Keynesians will continue to blame Congress for never voting for new fiscal stimulus after February 2009. Others will blame the Federal Reserve for sitting on its hands while the labor market stalls. This jobs report is a Rorschach in which each group will see the conclusions they've already reached."
"In the meantime," he concludes, "everything is moderately bad and not getting better."
So where does this leave us for this week's FOMC meeting?
Long-time fed watcher Tim Duy says given Bernanke's description of the labor market situation as "grave," the ongoing European debt crisis, uncertainty in China, the increasingly vocal support of Fed doves and marginalization of Fed hawks and that time is running out for Bernanke with the nontrivial possibility of a Romney win, "it is hard to come to any conclusion other than to expect additional easing next week….In fact, if they don't ease this time, I think we will need to conduct a fundamental reassessment about what exactly is happening on Constitution Ave."
Moreover, despite Bernanke's emphasis in his speech last week at Jackson Hole, that the economy could use more help from fiscal policymakers, with the election just months away and with the severe political gridlock in Congress, the chances of more help from fiscal policy, either from tax cuts or more spending, is very, very low, according to Mark Thoma.
"The Fed knows this — if the Fed doesn't intervene then there will be no help for the economy at all — and that's another reason to expect the Fed to do more."
Previously on The Financialist: