So much for the Bernanke legacy. We can safely predict that he will have both admirers and critics, with the balance between them to be determined by incoming data between now and his departure for greener fields, and thereafter. So far, the data do not provide unambiguous evidence for either Bernanke's supporters or detractors. On the plus side, Bernanke can claim that he has succeeded in pushing up asset prices, creating a "wealth effect" sufficient to forestall a dip into recession by luring consumers into car showrooms and the housing market. Share prices shot to all-time highs recently, house prices are rocketing up, and the number of jobs is increasing steadily. But retail sales disappointed in June, GDP grew only 1.8% in the first quarter, and forecasters are scrambling to lower their second-quarter growth forecasts to less than 1%. My own guess is that Bernanke has helped to prevent the slow recovery from becoming slower or even stalling. After all, with taxes up and government spending down, fiscal policy is tightening, creating what we have come to call "headwinds", their strength increased by the impending implementation of Obamacare. At minimum, Bernanke can claim to have devised a monetary policy that keeps the economy inching forward in the face of those headwinds.
David Fuller's view I think this is a good summary, and assuming rumours of some tension between President Obama and Federal Reserve Chairman Bernanke have been overstated, Janet Yellen should remain the frontrunner for his post. I also assume the lengthy list of candidates put forward is a public relations exercise, to generate continued press coverage of suspence and careful deliberation.Back to top