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.”  
MY TAKE
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. 

No comments:

Post a Comment