Fed head sees bad-ish, but not bad, times ahead

In testimony this morning before Congress’ Joint Economic Committee, Federal Reserve Chairman Ben Bernanke predicted “a host of economic problems, including the severe housing slump, will cause business growth to slow noticeably in coming months”, according to an Associated Press summary. Who’d have guessed that beneath Bernanke’s dull, banker-ish exterior was the sort of giddy optimism normally associated with a kid waiting on line to see a mall Santa?

Yesterday, Goldman Sachs economist Jan Hatzius issued a report describing California’s economy as being on the verge of falling into a recession. And if California goes, Hatzius warns, the national economy will follow. The villain, or at least the leading member of the cast of villains pushing California towards the edge, is the housing slump.

You may have missed news of Hatzius’ report, perhaps distracted by news that the governor is planning deep, across-the-board budget cuts, to be followed by more budget cuts, since the state’s budget deficit has swelled to an estimated $10 billion. Or perhaps you were distracted yesterday by the Dow’s 360 points drop.

Regardless of all the above, try to be cheerful. After all, the holidays are hard upon us. Soon, the malls will be filling up with Santas (many not smelling of booze, or stained by the weak bladders of the children who fill their laps). If you see Fed Chairman Ben Bernanke waiting on line for one of the jolly ol’ elves, please give him my regards.

Tags: Ben Bernanke, budget cuts, Congress' Joint Economic Committee, deficit, Federal Reserve, Goldman Sachs, governor, housing slump, Jan Hatzius, optimism, recession, Santa