Wednesday, August 4, 2010

Bernanke as Economic Forecaster: What the Hell Is He Looking At?

NyPo reports:
A day after Ben Bernanke said rising wages would likely spur household spending, a spate of weak economic reports is painting an entirely different picture.

While the US has "a considerable way to go" before the economy fully recovers, the Federal Reserve chairman said on Monday that rising demand from households and businesses should sustain growth.

Undercutting Bernanke's optimistic outlook was a series of economic reports yesterday showing consumer spending was flat in June as personal income growth ground to a halt...

The government is expected to report non-farm payrolls fell by 65,000 in July after declining by 125,000 in June, while the unemployment rate could rise to 9.6 percent from 9.5 percent.

In other bad news, contracts for buying existing homes plunged 19 percent in June from a year ago to its lowest level in nine years, according to the National Association of Realtors. Its separate index for all pending home sales collapsed to its lowest level ever.

Economist Jill Brown of Credit Suisse said "the magnitude is staggering -- the index has fallen 32 percent over the past two months."

Factory orders also slid 1.2 percent in June, the second month of declines following nine months of gains.
Aside from the fact that Bernanke fails to understand that it is production, not consumption that spurs an economy, his apparent failure to even recognize that the economy overall is in decline again is truly astounding.

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