A housing recovery is dependent on more jobs, but Federal Reserve Chairman Ben Bernanke says the sustainability of recent employment growth in the economy is uncertain.
“We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Bernanke said, while speaking at the National Association for Business Economics Annual Conference in Washington D.C.
Private employment increased by 250,000 jobs each month for the three-month period ending in February.
Bernanke said there is still a high level of long-term unemployment and the number of jobs and hours worked is still below pre-crisis levels. He also suggested there is a puzzle that economists have to work through— namely that job growth has failed to directly coincide with dramatic growth in gross domestic product.
The Fed chairman said long-term unemployment could be the result of lagging demand, causing workers’ skills to atrophy, or it could be a structural issue, such as workers with mismatched skills, which will take different policy tools to fix.
“If structural factors are the predominant explanation for the increase in long-term unemployment, it will become even more important to take the steps needed to ensure that workers are able to obtain the skills needed to meet the demands of our rapidly changing economy,” Bernanke said.
The Fed Chairman said the decline in the unemployment rate could also be less relevant if long-term job seekers are simply dropping out of the hunt.
“Because a person has to be either working or looking for work to be counted as part of the labor force, an increase in the number of people too discouraged to continue their search for work would reduce the unemployment rate, all else being equal — but not for a positive reason,” the chairman said in his prepared statements.