Fed’s Bernanke looks beyond broad market indicators

Ben Bernanke, chairman of the Federal Reserve, today (August 6) warned that while important aggregate measures of the US economy are improving, many individuals and households are still suffering.

Speaking via pre-recorded video at the 32nd General Conference of the International Association for Research in Income and Wealth in Cambridge, Massachusetts, Bernanke explained how advancements in data collection infrastructures at the Fed have, "over the years, greatly enhanced our ability to receive timely and accurate measures of those variables".

He said the use of aggregate measures, such as gross domestic product and personal consumption expenditures, had demonstrated the "severe economic stress felt by millions of people and hundreds of communities across the country".

Bernanke was cautious about blindly following aggregate statistics, however, saying they can sometimes "mask" important information. "For example, even though some key aggregate metrics – including consumer spending, disposable income, household net worth and debt service payments – have moved in the direction of recovery, it is clear many individuals and households continue to struggle with difficult economic and financial conditions," he said.

"Exclusive attention to aggregate numbers is likely to paint an incomplete picture of what many individuals are experiencing. One implication is that we should increase the attention paid to microeconomic data, which better capture the diversity of experience across households and firms. Another implication, however, is that we should seek better and more direct measurements of economic well-being, the ultimate objective of our policy decisions," Bernanke added.