“When Growth is Not Enough” is the title of a recent Ben Bernanke speech in Portugal. I found it via the NYT article on the “Robocalypse”, which contained this bizarre quote from Ben S. Bernanke “as recent political developments have brought home, growth is not always enough.”
Something terrible has happened to US GDP growth, even if it has escaped the attention of our former Fed Chair.
In his speech, Bernanke is trying to make sense of how his tenure at the Fed was followed by a populist political rebellion. To his credit, early in the essay, he does admit that the “recovery was slower than we would have liked”, but in the round, as the title of his essays suggests, he is a glass-is-half-full kind of guy on the economy “the [Fed] is close to meeting its … goals of maximum employment and price stability… more than 16 million … jobs have been created… the latest reading on unemployment, 4.3 percent, is the lowest since 2001.” He then writes “So why, despite these positives, are Americans so dissatisfied?” He lists four reasons:
- Slow median income growth, especially for male workers. Hourly wages for males have declined since 1979.
- Declining rates of intergenerational mobility
- Social dysfunction in economically marginalized groups (see Case-Deaton on mortality increases for working-class Americans).
- Political alienation.
I’m going to go with the latter. After all, if GDP growth and inflation are both below target, and the Fed tightens monetary policy, tell me what is supposed to happen?