In his zeal to let the markets know the time for tapering is coming, Bernanke says in the PC:
The labor market has continued to improve, with gains in private payroll employment averaging about 200,000 jobs per month over the past six months.
Over the past six months it has expanded closer to 190 thousand than 200 thousand. What about the fact that in the 12 months to May 2012 the average monthly employment gain was 187.thousand while in the last 12 months to May 2013 it has been 176 thousand. How can he say the labor market continues to improve? If by ‘improve’ he simply means adding jobs that´s a low bar indeed, especially taking account of the more than 7 million job losses that took place between mid-2008 and mid-2010.
In the next sentence Bernanke says:
Inflation has been running below the Committee’s longer-run objective of 2 percent for some time and has been a bit softer recently. The Committee believes that the recent softness partly reflects transitory factors and with longer-term inflation expectations remaining stable, the Committee expects inflation to move back towards this 2 percent longer-term objective over time. We will, however, be closely monitoring these developments as well.
The chart shows that core inflation has been below the 2% target since the start of the crisis and that for the past 12 months both headline and core PCE have been below the target and trending down.
And where the hell he gets the idea that “longer-term inflation expectations are stable”? For the past three months it´s been a ‘downhill ride’.
It was interesting to note that Bullard, a ‘card-carrying’ inflation hawk dissented because he´s worried about inflation being too low!