Tags: Lazear | Fed | QE | tapering

Former Bush Adviser Lazear: If Bernanke's Words Rule, No Major Tapering

By    |   Wednesday, 02 October 2013 08:10 AM

If Federal Reserve policy is consistent with Fed Chairman Ben Bernanke's recent comments, there will be no major tapering of quantitative easing (QE) anytime soon, says Edward Lazear, chairman of the Council of Economic Advisers under President George W. Bush.

The Stanford University economist makes that conclusion based on what's happening in the job market.

While the unemployment rate dropped to 7.3 percent in August, "the labor market is still sickly, because . . . the employment rate — the proportion of the working-age population that has jobs — has made little progress," Lazear writes in The Wall Street Journal.

Editor’s Note:
Obama Donor Banned This Message (Shocking)

"The employment rate is the best single indicator of labor-market health, and it is still hovering at around 58.5 percent, down significantly from its pre-recession levels of over 63 percent."

Bernanke and some Fed governors have made clear their concern about the employment rate, Lazear says. That argues against a significant tapering in the near future, he maintains.

But that doesn't mean QE is a good thing, Lazear notes. "The labor market's behavior since September 2012 does not provide strong evidence that the bond buying has done much for economic growth."

Harvard economist Martin Feldstein says the Fed is unlikely to taper until next year.

If "the FOMC's [Federal Open Market Committee] members must be satisfied with the rate of real GDP growth, the Fed is highly unlikely to start tapering QE this year, because growth would have to accelerate to about 3 percent in the final quarter," he writes in an article for Project Syndicate.

Growth totaled 2.5 percent in the second quarter.

Editor’s Note: Obama Donor Banned This Message (Shocking)

Related Stories:

WSJ: Bernanke's Decision Against Tapering Shows 'Failure of Nerve'

Fed's Stein: Tie QE Tapering to Labor Market Measure

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If Federal Reserve policy is consistent with Fed Chairman Ben Bernanke's recent comments, there will be no major tapering of quantitative easing (QE) anytime soon, says Edward Lazear, chairman of the Council of Economic Advisers under President George W. Bush.
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2013-10-02
Wednesday, 02 October 2013 08:10 AM
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