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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (42386)	9/27/2005 1:04:08 PM
From: TH	Respond to of 110194

CR, I have issues with some of these statements, but there is some prudent language too. I remain objective and impartial. For now. GT TH news.yahoo.com Impact of oil price still small: Bernanke 1 hour, 28 minutes ago CHICAGO (Reuters) - High energy prices are a burden on households and could ultimately restrain economic growth but so far the impact has been modest, a top White House economic adviser said on Tuesday. "The U.S. economy is in the midst of a strong and sustainable economic expansion," Ben Bernanke, chairman of the President's Council of Economic Advisers, said in remarks prepared for the National Association for Business Economics annual meeting. "The resilience of the economy ... is helping it to absorb the shocks to energy and transportation from the hurricanes," Bernanke said, noting that damage from last weekend's Hurricane Rita was less than feared in most areas. Inflation remains well controlled despite high energy prices and a favorable inflation environment is likely to persist, he said, citing ten-year inflation expectations of about 2.5 percent per year shown by inflation-indexed Treasury bonds. The short-term economic outlook remains dominated by Hurricane Katrina and the ensuing "virtual shutting-down of the Gulf Coast economy," Bernanke said, joining other forecasters in looking for a hit to job creation and growth in the current quarter. Beyond that, "recovery and rebuilding should ultimately increase growth rates and rates of job creation, perhaps by the fourth quarter and certainly in the first half of next year," he said. At the same time, as the federal government spends billions to get the Gulf region back on its feet, "you still need to maintain overall discipline" in spending, he said. "We must ensure that the funds we commit are spent wisely and with careful oversight," Bernanke said. "The private sector, not the public sector, must lead the rebuilding effort," he said, adding that "we don't want to rebuild New Orleans and have the same problems down the road." Retail gasoline prices in most of the United States, while still high, are likely to fall in the next few months back to levels seen before the hurricanes hit, he said. Crude oil prices on Tuesday were trading near $65 per barrel, down from post-Katrina highs above $70 but still around some of the highest levels ever. Well-controlled inflation expectations have moderated the effects of energy price increases, "since those increases no longer set off an inflation spiral and the associated increases in interest rates," he said. As a result the Federal Reserve "has not had to respond to higher energy prices with violent increases in interest rates," Bernanke said, praising "years of good policy" by the central bank. Bernanke was a Fed governor before moving to the White House in June, and has been talked about as a leading contender to be the next Fed Chairman when Alan Greenspan retires in January.