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An Unofficial Translation of Bernanke's Jackson Hole Speech

Translation: Fat cats will get fatter. Rising sales and increased business confidence should also lead firms to expand payrolls. However, investment in structures will likely remain weak. Translation: The commercial real estate market will still be in the tank. On the fiscal front, state and local governments continue to be under pressure; but with tax receipts showing signs of recovery, their spending should decline less rapidly than it has in the past few years. Translation: Kiss state pension funds goodbye. Federal fiscal stimulus seems set to continue to fade but likely not so quickly as to derail growth in coming quarters. Translation: With the Republicans in control of Congress, they will play spoilers. Obama will get no more big spending bills into law. Although output growth should be stronger next year, resource slack and unemployment seem likely to decline only slowly. The prospect of high unemployment for a long period of time remains a central concern of policy. Translation: The job market will be a disaster for years. "A central concern for policy" means nobody knows what to do about it; nothing has worked. Not only does high unemployment, particularly long-term unemployment, impose heavy costs on the unemployed and their families and on society, but it also poses risks to the sustainability of the recovery itself through its effects on households' incomes and confidence. Translation: Anyone who believed my previous puffery about the recovery has the IQ of something really funny that Dave Barry would come up with. Maintaining price stability is also a central concern of policy. Recently, inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy in the long run. Translation: "Price stability" means rising prices. Prices have been almost flat for a year, which is unacceptable to Keynesians, which senior FED economists are. With inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly toward levels more consistent with the Committee's objectives. Translation: Get ready for quantitative easing. At this juncture, the risk of either an undesirable rise in inflation or of significant further disinflation seems low. Of course, the Federal Reserve will monitor price developments closely. Translation: The FED is paid to run the numbers. It will run the numbers. I am not about to say in advance what we plan to do or when.

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