Poor numbers likely to spur Fed action

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By Frank Quaratiello and Ira Kantor | The Boston Herald | September 8, 2012

The weak August jobs report will likely force the Federal Reserve to launch a third round of “quantitative easing,” basically creating new money to prop up the economy, even if the central bank doesn’t explicitly tip its hand at next week’s meeting.

The country’s unemployment rate dropped to 8.1 percent, but only 96,000 new jobs were added last month, 45,000 fewer than in July. The jobless rate declined mainly because 368,000 Americans gave up looking for work.

“If last night was the party, this morning is the hangover. For every net new job created, nearly four Americans gave up looking for work entirely,” GOP presidential nominee Mitt Romney said, contrasting the jobs report to this week’s festive Democratic National Convention.

Economists said the lackluster numbers will make November’s election a tighter race, even after positive news from Europe sent the financial markets soaring Thursday. Read More

Ben Bernanke ‘out of touch’

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Bay State economists say more action by the Fed is needed

By Jessica Van Sack | The Boston Herald | September 1, 2012
Investors reacted well to Federal Reserve Chairman Ben Bernanke’s highly anticipated address yesterday, in which he reiterated the central bank was ready to act “as needed” — but economists had a different view.

At the Fed’s annual symposium in Jackson Hole, Wyo., Bernanke stopped short of calling for a controversial “quantitative easing” program, but acknowledged the economy is on the wrong track.

“Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time,” he said.

The Fed has two mandates — to control inflation and to keep unemployment low. And while inflation remains below its 2 percent target, unemployment continues to hover above 8 percent. Read More

Three cheers for Mr. Rosengren

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By Barry Bluestone | Boston.com | August 7, 2012

The Federal Reserve Bank of Boston has been blessed with extraordinary leadership since the 1960s, if not longer. Eric Rosengren has continued that tradition since he became president of the bank in 2007. Now he is speaking out calmly and intelligently about the state of the economy and the need for his Federal Reserve colleagues in Washington to take greater action to accelerate economic growth. With the domestic economy’s annual growth rate slowing to 1.5 percent this past spring, the national unemployment rate rising to 8.3 percent, and Europe’s economy on the brink of another deep recession, Rosengren is urging the Fed to keep interest rates low by aggressively buying up bonds – possibly trillions of dollars of them.

In particular, the Boston Fed President would like to see the Fed buy mortgage securities in order to lower home loan rates further. This would make it possible for more households to refinance their mortgages at lower rates, leaving them with additional money each month to purchase other goods and services. It would also encourage renter households with good credit ratings to purchase homes, encouraging more housing construction. Lower interest rates would likewise help families pay off credit card debt. Interest rates are already at an all-time low, but driving them down further could spur at least a bit more investment activity. Read More

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