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article imageWith U.S. unemployment at 9.2%, Fed considering more stimulus

By Michael Krebs     Jul 13, 2011 in Politics
Despite stubborn unemployment in the wake of prior stimulus plans, Federal Reserve Chairman Ben Bernanke informed Congress on Wednesday that the federal government is prepared for future stimulus programs.
Federal Reserve Chairman Ben Bernanke addressed Congress on Wednesday to alert lawmakers on the readiness of the central bank to deliver further monetary stimulus to a U.S. economy beset by enduring setbacks, CNBC reported.
"Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation," Bernanke said. "However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate."
Persistent unemployment has largely defined the Obama presidency, and critics have charged that stimulus programs driven by the White House have been ineffective, costing $278,000 per job, as the Washington Post reported.
Rising inflation has also presented a challenge to domestic economic policy. However, the prospect of the Fed's "quantitative easing" conclusion may help increase interest rates and push off short-term inflationary pressures. But, according to the Business Insider, there may be another plan to push growth now and to worry about inflation later.
Regardless, additional stimulus programs are likely not going to sit well with Republican lawmakers, most of whom are still reeling from debt ceiling talks with President Obama.
And business-minded critics of the federal stimulus are already making their voices known.
"So, not only has the stimulus spent $800B without any more stuff, it doesn't even hire more people," Eric Falkenstein reported for Business Insider on Wednesday. "Alan Blinder makes a similar point--we have 500k fewer government workers at all levels--in spite of spending rising 16% over the past 3 years at all levels (from inflated 2008 levels, no less)."
More about Federal reserve, Stimulus, Unemployment, Inflation, Economy
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