Sunday, March 4, 2012

Bernanke Talks about "Massive Fiscal Cliff" and More

Chairman Bernanke’s testimony  last week also included comments on: 
  • government spending -  “under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases,” and “I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date”, 
  • growth  - "we do not see at this point that the very severe recession has permanently affected the growth potential of the U.S. economy”, 
  • oil prices  - ” when you have shocks to commodity prices arising from geopolitical events and the like, those are unambiguously negative, and they are bad for both households and for the broader economy", 
  • housing  - “right now there is still uncertainty about where the housing market is going, which I think is troubling” and
  • unemployment - “one concern we do have, of course, is the fact that more than 40% of the unemployed have been unemployed for six months or more. Those folks are either leaving the labor force or having their skills eroded.”  
Mostly improving economic data has had a positive impact on many markets.  A renewed focus on the U.S. government deficit, along with heightened oil prices and the continuing decline in home prices may present headwinds for the economy and investors. 

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