When Fed chief Ben Bernanke takes action, good things seem to happen. Like markets go up. But when he talks...not so much. Investors were heartened by the projected 8,000-job rise in March payrolls from ADP, as well as an upward bump in the factory orders report. Then Bernanke started giving his pessimistic congressional testimony. As consulting firm Global Insight interpreted it:
Bernanke delivered a short and very candid testimony on the state of the economy and the financial markets. The Chairman was more blunt and upfront about the prospects for the economy than what we heard in testimony earlier this year: "it now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly." Moreover, Bernanke believes that risks to the outlook remain on the downside. Bernanke's comments on the economic outlook presage another downward revision to the Fed's central tendency forecast at the upcoming semi-annual testimony in July, and bring the Fed's outlook more closely in line with Global Insight's expectation of a slight contraction in the first half of 2008.
Maybe it's time for the new chairman to call the old chairman—Alan Greenspan was noted for his opaque congressional testimonies—for some quick lessons on stupefying speechifying. Transparency turns out to be a huge downer.
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