How would Bernanke know when recession will end?
Federal Reserve chairman Ben Bernanke told 60 Minutes that the U.S. recession could end this year, saying, "We'll see the recession coming to an end probably this year."
As would be expected, he put a number of conditions on his comments. The bank rescue will have to work quickly. But, it is fair to ask how accurate a forecaster he is. It could certainly be argued that the Fed was too slow in cutting rates as the economy began to sink. Most of the notes from Fed meetings show that the agency was too optimistic about the depth of the recession. The Fed also hung onto the notion that inflation would be a problem. As it turns out, deflation may be the most formidable enemy to come out of the economy's collapse.
According toForbes, in April 2008, Bernanke told Congress that "The U.S. economy will not grow much in the first half of 2008, and could even contract." He was off by a lot on that assessment. By most measures, the recession had already begun.
Douglas A. McIntyre is an editor at 24/7 Wall St.