Bernanke Says Fed Is Ready to Help; Carter Wins American’s Release
There is more evidence out Friday morning that the U.S. economy has slowed to nearly a crawl of late. The gross domestic product, or GDP, which is the value of all goods and services produced, was revised downward by the Commerce Department to 1.6 percent from April to June.
While the numbers weren’t quite as bad as some projected, it’s still lower than the initial estimate of 2.7 percent for the second quarter and down from 3.7 percent in the first quarter of the year. Consumer spending was slightly better than expected, but overall the report showed a major slowing of the economy from late last year when it grew by 5 percent in the last three months of the year.
In a speech from Jackson Hole, Wyo., that was closely watched, Federal Reserve Chairman Ben Bernanke also spoke of the economic slowdown. He said he believes the economy will continue to grow in 2011 but recognizes that the pace is weakening for now.
“Growth recently appears somewhat less vigorous than we expected,” Bernanke said in prepared remarks to colleagues, economists and policymakers at the Fed’s annual conference. “The painfully slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects and dampened confidence.”
Just as importantly, markets and investors were waiting to see if Bernanke would commit the Fed to taking a stronger hand more to spur the economy and ward off what some see as gathering clouds of deflation.
Bernanke said he was ready to jump in if needed, but he stopped short of announcing any new and immediate action.
The Fed chairman told attendees that the Federal Reserve and its Open Market Committee is prepared to buy more government bonds and other assets to help bring down long-term interest rates when it made sense to do so. But he noted that rates were already low so that the benefits of doing that were not yet clear.
Similarly, he said it was not clear if other steps — such as continuing to keep short-term interest rates for an indefinite period of time or “additional monetary easing would be beneficial.”
But he said the Fed would do what was needed to try warding off deflation even as he warned “central bankers alone cannot solve the world’s economic problems.” We’ll have more on all this later.
Carter Secures Release of American in North Korea
Former President Jimmy Carter secured the release of Aijalon Mahli Gomes, an American human rights activist who was sentenced in April to eight years of hard labor in North Korea for illegally entering the country. Gomes departed Pyongyang with Carter. They’re expected to land in Boston on Friday afternoon.
The Associated Press released footage of Carter and Gomes preparing to leave North Korea:
Meantime, North Korean leader Kim Jong-Il is reportedly visiting China with his son, Kim Jog-Un. Many believe Kim Jong-Il is trying to build support for a planned transfer of power to his son.
Foreign Policy’s Sunny Lee writes about how South Korea is taking the news.
Video of Chilean Miners Released
More video footage of the 33 Chilean miners trapped deep in a copper mine shows them appearing slim but healthy, singing the national anthem and yelling, “Long live Chile, and long live the miners!” About five minutes of the 45-minute video were released late Thursday by national television via the Chilean government.
Here’s video of the footage, plus a report from ITN:
The New York Times compiled more footage here.
Report: CIA Paying Members of Karzai Administration
Following up on Thursday’s New York Times story, the Washington Post reports Friday: “The CIA is making secret payments to multiple members of President Hamid Karzai’s administration, in part to maintain sources of information in a government in which the Afghan leader is often seen as having a limited grasp of developments, according to current and former U.S. officials.”