Low expectations for Bernanke's speech in Minneapolisby Martin Moylan, Minnesota Public Radio
Minneapolis — If Federal Reserve Chairman Ben Bernanke adheres to past appearances, he will choose his words very carefully when he speaks at the Economic Club of Minnesota Thursday afternoon.
Wall Street and the media typically weigh his every word for indications or hints of a possible change in the Fed's efforts to boost the economy, and will likely pay especially close attention to Bernanke's Minneapolis speech.
However, there's little expectation that Bernanke will disclose any shift in the Fed's monetary policy.
"We're all hanging on his every word, right now," Wells Fargo economist Scott Anderson said.
"Economists, business leaders and politicians: we're looking for leadership to try to get us out of this economic mess," Anderson said. "Right now the Federal Reserve is in the best position to do that."
However, Anderson expects little from Bernanke, except possibly to reiterate a speech from a month ago in Wyoming.
"(Bernanke) will certainly talk about our economic challenges, including a high long-term unemployment rate," Anderson said.
Bernanke's speech will be broadcast live on three, and possibly a fourth, television network. His speech comes as some economists worry another recession might be near. Home prices are depressed. Workers' pay is barely rising. Household debt remains high. Last month, the nation failed to add any net jobs, as the country's unemployment rate hung at 9.1 percent.
Despite his power to move markets, Bernanke doesn't set Fed policy himself.
Augsburg College economist Ed Lotterman said people often forget that a committee decides the Fed's monetary policy, among the members include head of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota. Bernanke can't dictate what the Fed does, and that limits what Bernanke can say, Lotterman said.
"I would be very surprised if he stuck his neck out in terms of conveying any new information about what the fed might do in the future," Lotterman said.
Many people are disappointed the Fed hasn't been able to rev up the economy, but it is unclear what the federal government can or should do about the economy, said economist Art Rolnick, a former top official at the Minneapolis Fed.
Rolnick said he'd like Bernanke to explain why he thinks it's been so hard to create jobs.
"It is a puzzle," Rolnick said. "Despite what a lot of the politicians are saying — that they will find ways to create jobs for this economy &mdash it's not obvious government has the tools to do that."
The Fed has attempted to create jobs by boosting the money supply and lowering interest rates. However, it's difficult to convince businesses and consumers to borrow when they're worried about where the economy is headed, said state economist Tom Stinson. His goal should be to improve consumer confidence, to improve confidence in economic policy," Stinson said.
Consumer spending accounts for more than two-thirds of the economy.
Tonight, President Barack Obama will address the nation to unveil details of a jobs, tax cut and spending package he hopes can recharge the recovery and spur job creation.
Given the timing, Bernanke may wait for the president's announcement before signaling any new move.
- Morning Edition, 09/08/2011, 6:20 a.m.