While the Fed chief said any stimulus should be “well targeted,” even a general endorsement amounts to a political green light. Mr. Bernanke certainly knows that Mr. Obama and Democrats on Capitol Hill are talking about some $300 billion in new “stimulus” spending, while President Bush and Republicans are resisting. And by saying any help should “limit longer-term effects” on the federal deficit, he had to know he was reinforcing Democratic opposition to permanent tax cuts.
“The job market has eroded measurably and industrial production has weakened sharply in the last couple of months. Those are the two key things. The other thing is that retail sales have also sharply weakened,”
Just one problem: There isn’t any recession. The latest figures show that we clearly were not in one as of midsummer, whether you use the rule-of-thumb definition - two consecutive quarters of GDP shrinkage - or the looser concept of a sustained and significant economic decline.
Now it feels like we might be in one. We’ll know more after Christmas.
