Once Again

June 4, 2012

Last Friday the Department of Labor released their latest jobs report. Since that moment at 8:30 a.m. on Friday, the report has sparked a conversation about the economy’s standing and its vitality for the summer. The report detailed a dismal addition of 69,000 new jobs to payrolls in the United States and an uptick in the unemployment rate to 8.2 percent. While most of the conversation is focused on the country’s recovery and the overall level of unemployment, some have begun to ask if the Federal Reserve will now step in once again to stimulate the economy.

Traditionally the Fed’s purpose is to maintain a low inflation rate and encourage workforce participation. Much of the history of the Fed sees use of interest rates to accomplish both goals, but recently new measures have been taken to stimulate job growth. The Fed has expanded its balance sheet and purchased long-term bonds to lower borrowingcosts on a scale unprecedented in the bank’s history. “Operation Twist” reoriented the Fed’s portfolio to stock up on longer-term securities in another effort to lower borrowing costs and spur lending.

Three years later, there is more talk of action by the central bank to encourage job growth. While the bank has already announced that interest rates will stay at near 0 percent through 2014, Federal Reserve Chairman Ben Bernanke will likely hint at the role the Fed will play in the coming months at the Joint Economic Council meeting this Thursday. We hope that instead of continuing to artificially create growth through uncharted policies, Bernanke will consider providing a stable and consistent environment where businesses can grow. After all, Albert Einstein defined insanity as,“doing the same thing over and over again and expecting a different result. “

Tags:, , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *