Fed: The Economy Stinks, Our Work Is Done

Flickr/<a href="http://www.flickr.com/photos/medilldc/5430998303/sizes/m/in/photostream/">Medill DC</a>

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Via the New York Times, the Federal Reserve announced today it’s ending efforts to bolster the country’s tepid economic recovery:

The nation’s central bank said Wednesday that it would complete the planned purchase of $600 billion in Treasury securities next week as scheduled, and then suspend its three-year-old economic rescue campaign, leaving in place the aid it already is providing but doing nothing more, for now, to bolster growth.

“The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected,” the Fed said in a statement. “The committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline.”

[…]

The statement offered hope that the pace of growth would increase, noting that many factors restraining the economy are likely to be temporary, including the impact of higher energy prices and the disruptions to manufacturing caused by the Japanese earthquake. Automakers already are planning sharp increases in production to compensate for the lost volume.

So that’s it. Apart from sticking with rock-bottom interest rates, the Fed is turning to a hope-and-wait strategy to see if economic growth, job creation, and consumer spending pick up in the coming months. Thanks a lot, Ben Bernanke.

Remember, front and center in the Fed’s mission is crafting monetary policy “in pursuit of maximum employment.” Right now, twenty-five million Americans can’t find full-time jobs. Fourteen million Americans can’t find any work. The Fed knows this: “Recent labor market indicators have been weaker than anticipated,” the organization said today.

Ezra Klein nailed it this morning on the Fed’s failure to fulfill its mission and spark a stronger, faster economic recovery:

[The Fed’s efforts have had] a modest impact on the worst economy since the Great Depression. The anger at the Fed isn’t coming because people have suddenly developed strong and nuanced views on quantitative easing. It’s coming because people are angry about the state of the economy, and the Fed is one of the major forces in the economy. The way to have avoided it wouldn’t have been to do less, but to do better, which would’ve meant doing more.

A growing number of economic policymakers—former Fed vice chairman Alan Blinder, former CEA chair Christina Romer, former associate director for the Fed’s monetary affairs division Joseph Gagnon—believe that would’ve been, and in many cases, still is, possible. They argue that the bank’s underwhelming impact on the recovery is evidence not of the Fed’s inability to more effectively fight the recession, but its unwillingness to do what was needed to fight the recession. Larger and more aggressive asset purchases, price-level targeting, and various other dips into unconventional measures were and are needed. But all that would’ve been economically more effective and politically easier a year ago, or even two years ago, than it is today. Today, the Fed is under intense criticism, which limits its freedom of action. Having not done enough, they’re now unable to do more.

LET’S TALK ABOUT OPTIMISM FOR A CHANGE

Democracy and journalism are in crisis mode—and have been for a while. So how about doing something different?

Mother Jones did. We just merged with the Center for Investigative Reporting, bringing the radio show Reveal, the documentary film team CIR Studios, and Mother Jones together as one bigger, bolder investigative journalism nonprofit.

And this is the first time we’re asking you to support the new organization we’re building. In “Less Dreading, More Doing,” we lay it all out for you: why we merged, how we’re stronger together, why we’re optimistic about the work ahead, and why we need to raise the First $500,000 in online donations by June 22.

It won’t be easy. There are many exciting new things to share with you, but spoiler: Wiggle room in our budget is not among them. We can’t afford missing these goals. We need this to be a big one. Falling flat would be utterly devastating right now.

A First $500,000 donation of $500, $50, or $5 would mean the world to us—a signal that you believe in the power of independent investigative reporting like we do. And whether you can pitch in or not, we have a free Strengthen Journalism sticker for you so you can help us spread the word and make the most of this huge moment.

payment methods

LET’S TALK ABOUT OPTIMISM FOR A CHANGE

Democracy and journalism are in crisis mode—and have been for a while. So how about doing something different?

Mother Jones did. We just merged with the Center for Investigative Reporting, bringing the radio show Reveal, the documentary film team CIR Studios, and Mother Jones together as one bigger, bolder investigative journalism nonprofit.

And this is the first time we’re asking you to support the new organization we’re building. In “Less Dreading, More Doing,” we lay it all out for you: why we merged, how we’re stronger together, why we’re optimistic about the work ahead, and why we need to raise the First $500,000 in online donations by June 22.

It won’t be easy. There are many exciting new things to share with you, but spoiler: Wiggle room in our budget is not among them. We can’t afford missing these goals. We need this to be a big one. Falling flat would be utterly devastating right now.

A First $500,000 donation of $500, $50, or $5 would mean the world to us—a signal that you believe in the power of independent investigative reporting like we do. And whether you can pitch in or not, we have a free Strengthen Journalism sticker for you so you can help us spread the word and make the most of this huge moment.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate