Weak U.S. economic growth means no additional jobs for Americans

Weak U.S. economic growth means no additional jobs for Americans

U.S. unemployment rates will continue to be high and no new jobs will be available to Americans if the economic recovery fails to quicken its pace soon. This is the sentiment aired by Federal Reserve Chairman Ben S. Bernanke when he spoke with business leaders in Ohio State University on Tuesday. He warned that prolonged joblessness may impact worker productivity.

“This is very unusual and very worrisome because people who are out of work for an extended period, their skills tend to erode,” he said, adding that up to 40 percent of those unemployed have not found a new job in more than six months.

The Fed has tried to jumpstart the U.S. economy and its latest bid was the purchase of Treasury bonds worth $600 billion. But average inflation has stayed above the 2 percent ideal limit and unemployment remains high despite modest gains in the latest U.S. jobs report. “There are obviously very severe economic and social consequences from this level of unemployment,” Bernanke said. “So getting new jobs, getting unemployment down is of an incredible importance.”

The bonds purchase has been criticized by some quarters who said that it will be largely ineffective and will only devalue the dollar and lead to runaway inflation. The decision to push through with quantitative easing has met disapproval from Germany and China, and from some Republicans who called for the early termination of the policy. The Fed has repeatedly allayed these fears to no avail. Bernanke said that the latest move is justified to build on the small growth displayed by the U.S. economy for the past 1 ½ years.

Posted by James Fried on Wednesday December 01 2010, 4:50 AM EST. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0