Bernanke: We need confidence
Published: Tuesday, November 30, 2010
Updated: Saturday, June 16, 2012 00:06
Federal Reserve Board Chairman Ben Bernanke said in a meeting on campus Tuesday that although the U.S. economy has been expanding for the past year, low consumer confidence has hampered progress toward solving nationwide unemployment issues.
"At the pace of growth that we're seeing, we're not growing fast enough to materially reduce the unemployment rate," Bernanke said Tuesday at a panel conversation on the economy at the Fisher College of Business. "In fact, the 9.6 percent unemployment rate we currently see is about the same as it was when the recession officially ended in June 2009."
Leaders from Ford Motor Co., IBM, Moody-Nolan Inc., Sophisticated Systems and Jeni's Splendid Ice Creams participated in the discussion, which was meant to help Bernanke see the job market through the lens of employers.
Bernanke received promising news from the co-owner of one Columbus-based company.
Jeni Britton Bauer, president of Jeni's Splendid Ice Creams, said that despite the poor economic climate, many small businesses have been opening in Columbus. She said her company has weathered the storm, hiring more than 50 employees in the past two years and expanding its operations outside Ohio.
Central Ohio's unemployment rate was 8.2 percent in October, much lower than the state average of 9.9 percent, according to the Ohio Department of Job and Family Services. The national unemployment rate was slightly lower than the state's, at 9.6 percent.
But the economic issues extend beyond the unemployment rate.
More than 40 percent of those unemployed have been jobless for six months or longer, Bernanke said. After being unemployed for an extended period of time, it becomes more difficult for someone to find a job.
"Particularly with young people — and the unemployment rate among young people is extremely high — this can have a very long-term effect on their employability, on their wages," Bernanke said. "We may find that the implications for our unemployment rate go well beyond the recovery from this episode."
But employment will not increase substantially if Americans' perception of the economy does not improve, he said.
"Part of the barrier to faster growth and recovery is confidence of households that they will be financially secure, that they can make purchases," Bernanke said. "With unemployment so high, that confidence is hard to come by."
Bauer said it's important for the government to create an environment in which businesses can develop.
"I started my business in the North Market here in Columbus, where it was just me and the ice cream machine and our customers," Bauer said.
Her business grew with the help of loans and other support from the government, which she said is vital to small businesses.
About 100 invited Ohio State students and faculty attended the discussion.
Vimala Nandula, a third-year in economics and finance, said it was interesting to hear the perspectives of a wide range of business leaders and see how every business is related.
Udit Sekhri, a third-year in finance, said it was encouraging to hear the business people's optimism about the future of the economy.
"All the CEOs were really confident in the future of the economy," he said. "That's important to me because our confidence comes from the confidence of our leaders."
Bauer said success comes in many forms and that students should not let the unemployment rates discourage them.
"My grandmother always said, ‘If you can't find a job, make a job,'" Bauer said. "I was a 22-year-old, pink-haired artist when I started up."