Unemployment in the US is pulling down the largest economy in the world. In June, the jobless rate was untouched at 8.2 percent, with 80,000 jobs added, figures from the Labor Department showed. Growth in private payrolls was said to be the weakest in 10 months. The modest increase in jobs eventually resulted to the unexpected decline in retail sales by 0.5 percent for the third month in June. Such retail sales figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc., and Credit Suisse to cut their growth forecast for the US economy in the second quarter of this year.
With these depressing figures, speculations are growing that the Federal Reserve would take on more measures to stimulate economic growth, and yesterday, markets turned their attention to Fed Chairman Ben Bernanke’s Congressional testimony. As expected, Bernanke touched on the issue of unemployment, telling lawmakers that progress in reducing unemployment is likely to be “frustratingly slow,” and again stressed that the central bank stands ready to take further action should the economy continue to show signs of deterioration. The Fed chairman also noted the slowing down of the economy in the first half of this year due to the European debt crisis, and other economic headwinds that are already beyond the control of the central bank.
Bernanke also threw the ball to Congress, saying that the most effective way that lawmakers could do to support the economy is to address the country’s fiscal challenges in a way as not to impede recovery, but considering the “long-run sustainability” of the economy. Markets have been hoping for clues as to another round of easing by the Fed, but Bernanke gave no clear indications of such possible move. Today, markets would once again wait for the Fed Chair’s continuation of his Congressional testimony.
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