Federal Reserve Chairman Ben S. Bernanke said the economy isn’t growing fast enough to “materially” reduce unemployment and expressed concern about workers who have been without a job for a long time.
“This is very unusual and very worrisome because people who are out of work for an extended period, their skills tend to erode,” Bernanke said at a meeting with business leaders in Columbus, Ohio. The share of unemployed who are jobless for more than six months is greater than 40 percent, Bernanke said.
Bernanke listened to concerns of executives including Alan Mullaly, president and chief executive officer of Ford Motor Co., and Jeni Britton Bauer, president of Jeni’s Splendid Ice Creams. The meeting took place against the backdrop of the most intense political attacks on the Fed in three decades following its Nov. 3 decision to purchase $600 billion in Treasury securities.
Bernanke and other Fed officials have been defending the central bank’s announcement that it would purchase $75 billion in Treasury securities a month through June to “promote a stronger pace of economic recovery” and prevent inflation from falling too low.
The program, known as quantitative easing, has been criticized by officials in countries including China and Germany. A letter from 23 people, including Republican officials and economists, urged the Fed to end the program early.
A separate letter from four top Republican lawmakers expressed “deep concerns” over the plan. Tennessee Senator Bob Corker and Indiana Representative Mike Pence, both Republicans, proposed removing the Fed’s mandate to maximize employment and instead focus the central bank solely on price stability.
Bernanke gave brief opening remarks and mostly listened to the business leaders’ assessment of the economy. At one point, he asked the executives what action from Washington could help them create jobs.
“Clarity,” said Samuel Palmisano, chairman of International Business Machines Corp. “Regulation is fine, just tell me what they are,” he said.
Palmisano said companies did not lack for liquidity. “There’s more than we could probably consume at rates that are very attractive at this point of time. It’s not a credit issue,” he said. “It’s simply clarity.”
Ford’s Mulally also cited regulatory clarity, as did the co-founder of Jeni’s Splendid Ice Creams. “Every step along the way is very complex,” Jeni Britton Bauer said, of navigating the regulations necessary to set up her company.
Participants also stressed the importance of educating skilled-workers and making sure that trade and tax policies allowed American firms to compete internationally.
Responding to the concerns of panelists, Bernanke said “We do want to provide as much clarity as we can so people will understand what the rules are.”
This year Bernanke has traveled around the country for several on-the-record, unscripted discussions, including one with students in Jacksonville, Florida, on Nov. 5 and today’s appearance with business leaders in Columbus.
“The Federal Reserve is very oriented toward getting this kind of on the ground intelligence,” Bernanke told the panelists and an audience of graduate students at Ohio State University.
“In order to find out what’s really happening on the ground and what’s going to happen in the future we need to get out,” Bernanke said.
Central bankers are weighing whether Bernanke should hold regular press conferences and where to draw the line between confidential policy discussions and officials’ public comments, the Fed said in minutes of its Nov. 2-3 meeting and an Oct. 15 videoconference held by governors and regional presidents.
Bernanke is the only head of a major central bank who doesn’t give press conferences to explain actions and projections. European Central Bank President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa each hold one after every policy meeting, while Bank of England Governor Mervyn King speaks once a quarter. Most presidents of the Fed’s 12 regional banks regularly take questions from press.
As Ohio’s capital, Columbus has 18 percent of its workforce employed in government, compared with 15 percent statewide, according to the U.S. Department of Labor. Columbus is home to companies such as Huntington Bancshares Inc., American Electric Power Co., and retailer Limited Brands Inc.
Unemployment in Columbus stood at 9 percent in July, the most recent month for which data are available, compared with the statewide rate of 10.3 percent and the national rate of 9.5 percent that month. Manufacturers account for almost 7 percent of employment in the Columbus area, according to the Labor Department.
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