Eigentlich keine großartigen Erkenntnisse enthalten - unaufgeregt,
vielleicht war genau das was die
Märkte sehen wollten.
-------------
Speech
Chairman Ben S. Bernanke
At
the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming
August 26, 2011
The Near- and Longer-Term Prospects for the U.S. Economy
Good morning. As always, thanks
are due to the Federal Reserve Bank of Kansas City for organizing this conference. This year's topic,
long-term economic growth, is indeed pertinent--as has so often been the case at this symposium in past
years. In particular, the financial crisis and the subsequent slow recovery have caused some to question
whether the United States, notwithstanding its long-term record of vigorous economic growth, might not
now be facing a prolonged period of stagnation, regardless of its public policy choices. Might not the
very slow pace of economic expansion of the past few years, not only in the United States but also in a
number of other advanced economies, morph into something far more long-lasting?
I can
certainly appreciate these concerns and am fully aware of the challenges that we face in restoring
economic and financial conditions conducive to healthy growth, some of which I will comment on today.
With respect to longer-run prospects, however, my own view is more optimistic. As I will discuss,
although important problems certainly exist, the growth fundamentals of the United States do not appear
to have been permanently altered by the shocks of the past four years. It may take some time, but we can
reasonably expect to see a return to growth rates and employment levels consistent with those underlying
fundamentals. In the interim, however, the challenges for U.S. economic policymakers are twofold: first,
to help our economy further recover from the crisis and the ensuing recession, and second, to do so in a
way that will allow the economy to realize its longer-term growth potential. Economic policies should be
evaluated in light of both of those objectives.
This morning I will offer some thoughts on
why the pace of recovery in the United States has, for the most part, proved disappointing thus far, and
I will discuss the Federal Reserve's policy response. I will then turn briefly to the longer-term
prospects of our economy and the need for our country's economic policies to be effective from both a
shorter-term and longer-term perspective.
Near-Term Prospects for the Economy and Policy
In discussing the prospects for the economy and for policy in the near term, it bears recalling briefly
how we got here. The financial crisis that gripped global markets in 2008 and 2009 was more severe than
any since the Great Depression. Economic policymakers around the world saw the mounting risks of a global
financial meltdown in the fall of 2008 and understood the extraordinarily dire economic consequences that
such an event could have. As I have described in previous remarks at this forum, governments and central
banks worked forcefully and in close coordination to avert the looming collapse. The actions to stabilize
the financial system were accompanied, both in the United States and abroad, by substantial monetary and
fiscal stimulus. But notwithstanding these strong and concerted efforts, severe damage to the global
economy could not be avoided. The freezing of credit, the sharp drops in asset prices, dysfunction in
financial markets, and the resulting blows to confidence sent global production and trade into free fall
in late 2008 and early 2009.
We meet here today almost exactly three years since the
beginning of the most intense phase of the financial crisis and a bit more than two years since the
National Bureau of Economic Research's date for the start of the economic recovery. Where do we stand?
There have been some positive developments over the past few years, particularly when
considered in the light of economic prospects as viewed at the depth of the crisis. Overall, the global
economy has seen significant growth, led by the emerging-market economies. In the United States, a
cyclical recovery, though a modest one by historical standards, is in its ninth quarter. In the financial
sphere, the U.S. banking system is generally much healthier now, with banks holding substantially more
capital. Credit availability from banks has improved, though it remains tight in categories--such as
small business lending--in which the balance sheets of potential borrowers remain impaired. Companies
with access to the public bond markets have had no difficulty obtaining credit on favorable terms.
Importantly, structural reform is moving forward in the financial sector, with ambitious domestic and
international efforts underway to enhance the capital and liquidity of banks, especially the most
systemically important banks; to improve risk management and transparency; to strengthen market
infrastructure; and to introduce a more systemic, or macroprudential, approach to financial regulation
and supervision.
In the broader economy, manufacturing production in the United States has
risen nearly 15 percent since its trough, driven substantially by growth in exports. Indeed, the U.S.
trade deficit has been notably lower recently than it was before the crisis, reflecting in part the
improved competitiveness of U.S. goods and services. Business investment in equipment and software has
continued to expand, and productivity gains in some industries have been impressive, though new data have
reduced estimates of overall productivity improvement in recent years. Households also have made some
progress in repairing their balance sheets--saving more, borrowing less, and reducing their burdens of
interest payments and debt. Commodity prices have come off their highs, which will reduce the cost
pressures facing businesses and help increase household purchasing power.
Notwithstanding
these more positive developments, however, it is clear that the recovery from the crisis has been much
less robust than we had hoped. From the latest comprehensive revisions to the national accounts as well
as the most recent estimates of growth in the first half of this year, we have learned that the recession
was even deeper and the recovery even weaker than we had thought; indeed, aggregate output in the United
States still has not returned to the level that it attained before the crisis. Importantly, economic
growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment,
which has recently been fluctuating a bit above 9 percent. Temporary factors, including the effects of
the run-up in commodity prices on consumer and business budgets and the effect of the Japanese disaster
on global supply chains and production, were part of the reason for the weak performance of the economy
in the first half of 2011; accordingly, growth in the second half looks likely to improve as their
influence recedes. However, the incoming data suggest that other, more persistent factors also have been
at work.
Why has the recovery from the crisis been so slow and erratic? Historically,
recessions have typically sowed the seeds of their own recoveries as reduced spending on investment,
housing, and consumer durables generates pent-up demand. As the business cycle bottoms out and confidence
returns, this pent-up demand, often augmented by the effects of stimulative monetary and fiscal policies,
is met through increased production and hiring. Increased production in turn boosts business revenues and
household incomes and provides further impetus to business and household spending. Improving income
prospects and balance sheets also make households and businesses more creditworthy, and financial
institutions become more willing to lend. Normally, these developments create a virtuous circle of rising
incomes and profits, more supportive financial and credit conditions, and lower uncertainty, allowing the
process of recovery to develop momentum.
These restorative forces are at work today, and they
will continue to promote recovery over time. Unfortunately, the recession, besides being extraordinarily
severe as well as global in scope, was also unusual in being associated with both a very deep slump in
the housing market and a historic financial crisis. These two features of the downturn, individually and
in combination, have acted to slow the natural recovery process.
Notably, the housing sector
has been a significant driver of recovery from most recessions in the United States since World War II,
but this time--with an overhang of distressed and foreclosed properties, tight credit conditions for
builders and potential homebuyers, and ongoing concerns by both potential borrowers and lenders about
continued house price declines--the rate of new home construction has remained at less than one-third of
its pre-crisis level. The low level of construction has implications not only for builders but for
providers of a wide range of goods and services related to housing and homebuilding. Moreover, even as
tight credit for some borrowers has been one of the factors restraining housing recovery, the weakness of
the housing sector has in turn had adverse effects on financial markets and on the flow of credit. For
example, the sharp declines in house prices in some areas have left many homeowners "underwater" on their
mortgages, creating financial hardship for households and, through their effects on rates of mortgage
delinquency and default, stress for financial institutions as well. Financial pressures on financial
institutions and households have contributed, in turn, to greater caution in the extension of credit and
to slower growth in consumer spending.
I have already noted the central role of the financial
crisis of 2008 and 2009 in sparking the recession. As I also noted, a great deal has been done and is
being done to address the causes and effects of the crisis, including a substantial program of financial
reform, and conditions in the U.S. banking system and financial markets have improved significantly
overall. Nevertheless, financial stress has been and continues to be a significant drag on the recovery,
both here and abroad. Bouts of sharp volatility and risk aversion in markets have recently re-emerged in
reaction to concerns about both European sovereign debts and developments related to the U.S. fiscal
situation, including the recent downgrade of the U.S. long-term credit rating by one of the major rating
agencies and the controversy concerning the raising of the U.S. federal debt ceiling. It is difficult to
judge by how much these developments have affected economic activity thus far, but there seems little
doubt that they have hurt household and business confidence and that they pose ongoing risks to growth.
The Federal Reserve continues to monitor developments in financial markets and institutions closely and
is in frequent contact with policymakers in Europe and elsewhere.
Monetary policy must be
responsive to changes in the economy and, in particular, to the outlook for growth and inflation. As I
mentioned earlier, the recent data have indicated that economic growth during the first half of this year
was considerably slower than the Federal Open Market Committee had been expecting, and that temporary
factors can account for only a portion of the economic weakness that we have observed. Consequently,
although we expect a moderate recovery to continue and indeed to strengthen over time, the Committee has
marked down its outlook for the likely pace of growth over coming quarters. With commodity prices and
other import prices moderating and with longer-term inflation expectations remaining stable, we expect
inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less,
that most Committee participants view as being consistent with our dual mandate.
In light of
its current outlook, the Committee recently decided to provide more specific forward guidance about its
expectations for the future path of the federal funds rate. In particular, in the statement following our
meeting earlier this month, we indicated that economic conditions--including low rates of resource
utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally
low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to
be the most likely scenarios for resource utilization and inflation in the medium term, the target for
the federal funds rate would be held at its current low levels for at least two more years.
In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be
used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at
our August meeting. We will continue to consider those and other pertinent issues, including of course
economic and financial developments, at our meeting in September, which has been scheduled for two days
(the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to
assess the economic outlook in light of incoming information and is prepared to employ its tools as
appropriate to promote a stronger economic recovery in a context of price stability.
Economic
Policy and Longer-Term Growth in the United States
The financial crisis and its aftermath have posed
severe challenges around the globe, particularly in the advanced industrial economies. Thus far I have
reviewed some of those challenges, offered some diagnoses for the slow economic recovery in the United
States, and briefly discussed the policy response by the Federal Reserve. However, this conference is
focused on longer-run economic growth, and appropriately so, given the fundamental importance of
long-term growth rates in the determination of living standards. In that spirit, let me turn now to a
brief discussion of the longer-run prospects for the U.S. economy and the role of economic policy in
shaping those prospects.
Notwithstanding the severe difficulties we currently face, I do not
expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the
recession if--and I stress if--our country takes the necessary steps to secure that outcome. Over the
medium term, housing activity will stabilize and begin to grow again, if for no other reason than that
ongoing population growth and household formation will ultimately demand it. Good, proactive housing
policies could help speed that process. Financial markets and institutions have already made considerable
progress toward normalization, and I anticipate that the financial sector will continue to adapt to
ongoing reforms while still performing its vital intermediation functions. Households will continue to
strengthen their balance sheets, a process that will be sped up considerably if the recovery accelerates
but that will move forward in any case. Businesses will continue to invest in new capital, adopt new
technologies, and build on the productivity gains of the past several years. I have confidence that our
European colleagues fully appreciate what is at stake in the difficult issues they are now confronting
and that, over time, they will take all necessary and appropriate steps to address those issues
effectively and comprehensively.
This economic healing will take a while, and there may be
setbacks along the way. Moreover, we will need to remain alert to risks to the recovery, including
financial risks. However, with one possible exception on which I will elaborate in a moment, the healing
process should not leave major scars. Notwithstanding the trauma of the crisis and the recession, the
U.S. economy remains the largest in the world, with a highly diverse mix of industries and a degree of
international competitiveness that, if anything, has improved in recent years. Our economy retains its
traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible
capital and labor markets. And our country remains a technological leader, with many of the world's
leading research universities and the highest spending on research and development of any nation.
Of course, the United States faces many growth challenges. Our population is aging, like those of
many other advanced economies, and our society will have to adapt over time to an older workforce. Our
K-12 educational system, despite considerable strengths, poorly serves a substantial portion of our
population. The costs of health care in the United States are the highest in the world, without fully
commensurate results in terms of health outcomes. But all of these long-term issues were well known
before the crisis; efforts to address these problems have been ongoing, and these efforts will continue
and, I hope, intensify.
The quality of economic policymaking in the United States will
heavily influence the nation's longer-term prospects. To allow the economy to grow at its full potential,
policymakers must work to promote macroeconomic and financial stability; adopt effective tax, trade, and
regulatory policies; foster the development of a skilled workforce; encourage productive investment, both
private and public; and provide appropriate support for research and development and for the adoption of
new technologies.
The Federal Reserve has a role in promoting the longer-term performance of
the economy. Most importantly, monetary policy that ensures that inflation remains low and stable over
time contributes to long-run macroeconomic and financial stability. Low and stable inflation improves the
functioning of markets, making them more effective at allocating resources; and it allows households and
businesses to plan for the future without having to be unduly concerned with unpredictable movements in
the general level of prices. The Federal Reserve also fosters macroeconomic and financial stability in
its role as a financial regulator, a monitor of overall financial stability, and a liquidity provider of
last resort.
Normally, monetary or fiscal policies aimed primarily at promoting a faster pace
of economic recovery in the near term would not be expected to significantly affect the longer-term
performance of the economy. However, current circumstances may be an exception to that standard view--the
exception to which I alluded earlier. Our economy is suffering today from an extraordinarily high level
of long-term unemployment, with nearly half of the unemployed having been out of work for more than six
months. Under these unusual circumstances, policies that promote a stronger recovery in the near term may
serve longer-term objectives as well. In the short term, putting people back to work reduces the
hardships inflicted by difficult economic times and helps ensure that our economy is producing at its
full potential rather than leaving productive resources fallow. In the longer term, minimizing the
duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of
attachment to the labor force that is often associated with long-term unemployment.
Notwithstanding this observation, which adds urgency to the need to achieve a cyclical recovery in
employment, most of the economic policies that support robust economic growth in the long run are outside
the province of the central bank. We have heard a great deal lately about federal fiscal policy in the
United States, so I will close with some thoughts on that topic, focusing on the role of fiscal policy in
promoting stability and growth.
To achieve economic and financial stability, U.S. fiscal
policy must be placed on a sustainable path that ensures that debt relative to national income is at
least stable or, preferably, declining over time. As I have emphasized on previous occasions, without
significant policy changes, the finances of the federal government will inevitably spiral out of control,
risking severe economic and financial damage.1 The increasing fiscal burden that will be associated with
the aging of the population and the ongoing rise in the costs of health care make prompt and decisive
action in this area all the more critical.
Although the issue of fiscal sustainability must
urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the
current economic recovery. Fortunately, the two goals of achieving fiscal sustainability--which is the
result of responsible policies set in place for the longer term--and avoiding the creation of fiscal
headwinds for the current recovery are not incompatible. Acting now to put in place a credible plan for
reducing future deficits over the longer term, while being attentive to the implications of fiscal
choices for the recovery in the near term, can help serve both objectives.
Fiscal
policymakers can also promote stronger economic performance through the design of tax policies and
spending programs. To the fullest extent possible, our nation's tax and spending policies should increase
incentives to work and to save, encourage investments in the skills of our workforce, stimulate private
capital formation, promote research and development, and provide necessary public infrastructure. We
cannot expect our economy to grow its way out of our fiscal imbalances, but a more productive economy
will ease the tradeoffs that we face.
Finally, and perhaps most challenging, the country
would be well served by a better process for making fiscal decisions. The negotiations that took place
over the summer disrupted financial markets and probably the economy as well, and similar events in the
future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S.
financial assets or to make direct investments in job-creating U.S. businesses. Although details would
have to be negotiated, fiscal policymakers could consider developing a more effective process that sets
clear and transparent budget goals, together with budget mechanisms to establish the credibility of those
goals. Of course, formal budget goals and mechanisms do not replace the need for fiscal policymakers to
make the difficult choices that are needed to put the country's fiscal house in order, which means that
public understanding of and support for the goals of fiscal policy are crucial.
Economic
policymakers face a range of difficult decisions, relating to both the short-run and long-run challenges
we face. I have no doubt, however, that those challenges can be met, and that the fundamental strengths
of our economy will ultimately reassert themselves. The Federal Reserve will certainly do all that it can
to help restore high rates of growth and employment in a context of price stability.
http://www.federalreserve.gov/newsevents/speech/bernanke20110826a.htm