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Bernanke: By Unemployment, Not So Good

By Floyd Norris, Economix - February 27, 2013

Business DayWorldU.S.N.Y. / RegionBusinessTechnologyScienceHealthSportsOpinionArtsStyleTravelJobsReal EstateAutosmodifyNavigationDisplay();/**//**//**/// if ((typeof adxpos_TopAd == "undefined") || (typeof adxads[adxpos_TopAd] == "undefined")) { if($("TopAd")) { $("TopAd").hide(); } } ///**/// if ((typeof adxpos_PushDown == "undefined") || (typeof adxads[adxpos_PushDown] == "undefined")) { if($("PushDown")) { $("PushDown").hide(); } } // February 26, 2013, 7:49 pmBernanke: By Unemployment, Not So Good By FLOYD NORRISFLOYD NORRIS

Notions on high and low finance.

As Catherine Rampell notes, Ben S. Bernanke pointed to the low inflation in his tenure in Senate testimony on Friday. Inflation has been lower during his tenure than during that of any postwar Fed chairman. But the Fed has a dual mandate:

“The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.”

That mandate was established in 1977, but we took all postwar Fed chairmen and ranked them by average unemployment rate during their tenure. Mr. Bernanke has the second-worst record:

Paul Volcker, 7.7% Ben S. Bernanke, 7.3% Arthur Burns, 6.3% G. William Miller, 5.9% Alan Greenspan, 5.5% Thomas McCabe, 5.0% William McC. Martin, 4.6%

If his term ended now, the rate would also have gone up more in his tenure than during any previous chairman since World War II.

All this means very little in determining how good a job Mr. Bernanke has done. He, along with others, deserves credit for keeping the Great Recession from being even worse than it was. The weak world economy had a lot to do with keeping inflation low and unemployment high. He does not deserve credit for the first, or blame for the latter.

Bernanke, Ben S, Federal Reserve System, Inflation (Economics), Unemployment, United States Economy Related PostsFrom EconomixDoes Bernanke Have the Best Inflation Record?Lifting the Veil on the Fed’s 2007 DiscussionsNo More, No LessWho’s in Charge of Fixing This?Inflation and Joblessness: The Tipping Point Previous Post Does Bernanke Have the Best Inflation Record? Next Post In Massachusetts We Trust// NYTD.jQuery(document).ready(function($) { NYTD.commentsInstance = new EmbeddedComments($, 'NYTD.commentsInstance'); NYTD.commentsInstance.init({configName: 'default'}); }); // /**/// if ((typeof adxpos_SponLink2 == "undefined") || (typeof adxads[adxpos_SponLink2] == "undefined")) { if($("SponLink2")) { $("SponLink2").hide(); } } // /**/// if ((typeof adxpos_Position1 == "undefined") || (typeof adxads[adxpos_Position1] == "undefined")) { if($("Position1")) { $("Position1").hide(); } } //Search This Blog Search Previous Post Does Bernanke Have the Best Inflation Record? Next Post In Massachusetts We TrustFollow This BlogTwitterRSS /**/// if ((typeof adxpos_XXL == "undefined") || (typeof adxads[adxpos_XXL] == "undefined")) { if($("XXL")) { $("XXL").hide(); } } // /**/// if ((typeof adxpos_MiddleRight == "undefined") || (typeof adxads[adxpos_MiddleRight] == "undefined")) { if($("MiddleRight")) { $("MiddleRight").hide(); } } // In order to view this feature, you must download the latest version of flash player here.var so = new SWFObject("http://graphics8.nytimes.com/packages/flash/business/20090302-econ-indicators-graphic/econIndicators.swf","nytSWF", 334,290,9,"#FFFFFF"); so.addParam("allowScriptAccess","always"); so.addParam("allowFullScreen","true"); so.addParam("BASE","http://graphics8.nytimes.com/packages/flash/business/20090302-econ-indicators-graphic/"); so.addVariable("allowCaching",true); so.write("embed70");#embed70{visibility:visible !important;}h2.multiHeadline {font-size:156% !important;padding:0px 0px 7px !important;margin:6px 6px 11px 3px !important;border-bottom:1px solid #CCCCCC !important;}Featured In Massachusetts We Trust

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Floyd Norris, the chief financial correspondent of The New York Times and The International Herald Tribune, covers the world of finance and economics.

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Binyamin Appelbaum covers business and economic topics for the Washington bureau of The New York Times.

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Our Policy on CommentsTag ListDAILY ECONOMIST 990UNEMPLOYMENT 476TAXES 342EMPLOYMENT 330HEALTH CARE 284JOBS 258CASEY B. MULLIGAN 211SIMON JOHNSON 206POLITICS 196JOBS REPORT 193NANCY FOLBRE 187FEDERAL RESERVE 178UWE E. REINHARDT 176HOUSING 175HEALTH INSURANCE 165BUDGET DEFICIT 162RECESSION 161WOMEN IN THE WORKF

Notions on high and low finance.

As Catherine Rampell notes, Ben S. Bernanke pointed to the low inflation in his tenure in Senate testimony on Friday. Inflation has been lower during his tenure than during that of any postwar Fed chairman. But the Fed has a dual mandate:

“The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.”

That mandate was established in 1977, but we took all postwar Fed chairmen and ranked them by average unemployment rate during their tenure. Mr. Bernanke has the second-worst record:

Paul Volcker, 7.7% Ben S. Bernanke, 7.3% Arthur Burns, 6.3% G. William Miller, 5.9% Alan Greenspan, 5.5% Thomas McCabe, 5.0% William McC. Martin, 4.6%

If his term ended now, the rate would also have gone up more in his tenure than during any previous chairman since World War II.

All this means very little in determining how good a job Mr. Bernanke has done. He, along with others, deserves credit for keeping the Great Recession from being even worse than it was. The weak world economy had a lot to do with keeping inflation low and unemployment high. He does not deserve credit for the first, or blame for the latter.

Many people look to the Massachusetts health care law as a model of what the nation’s Affordable Care Act may bring, but the impact on labor markets reflects very different approaches, an economist writes.

Failing to distinguish between consumption spending and investment spending has muddied the debate about the nation’s deficit and economy, an economist writes.

Buying and selling directly with other people and sharing items you are not using can deliver important economic gains that don’t show up in conventional economic data, an economist writes.

A proposal to toughen rules on money-market funds, issued by the regional banks of the Federal Reserve, would make the banking industry safer, an economist writes.

The employer penalties under the Affordable Care Act may have the effect of reducing wages, particularly because the penalties are not tax-deductible, an economist writes.

Floyd Norris, the chief financial correspondent of The New York Times and The International Herald Tribune, covers the world of finance and economics.

Catherine Rampell is an economics reporter for The New York Times.

Binyamin Appelbaum covers business and economic topics for the Washington bureau of The New York Times.

Shaila Dewan is an economics reporter for The New York Times.

Annie Lowrey covers economic policy for the Washington bureau of The New York Times.

Each day, Economix offers perspectives from expert contributors.

Economics doesn't have to be complicated. It is the study of our lives "” our jobs, our homes, our families and the little decisions we face every day. Here at Economix, journalists and economists analyze the news and use economics as a framework for thinking about the world. We welcome feedback, at economix@nytimes.com.

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