“The accumulating evidence does appear consistent with the financial crisis and the associated recession having reduced the potential growth rate of our economy somewhat during the past few years,” Bernanke said. This would explain “why the unemployment rate has declined in the face of the relatively modest output gains we have seen during the recovery.”
One gauge of unemployment -- which includes those who have given up searching for work and those who are employed part-time because they can’t find a full-time job -- stood at 14.6 percent in October.
Long-term unemployment has also remained elevated throughout the recovery. Among the unemployed, 40.6 percent have been without work for 27 weeks or longer.
Source of Strength
At the same time, the housing market has become one of the economy’s sources of strength as mortgage rates driven to record lows by the Fed’s asset buying spur higher prices, construction and builder sentiment. The average fixed rate on a 30-year home loan fell to 3.34 percent last week, the lowest in four decades of data, Freddie Mac data show.
New-home construction unexpectedly climbed to a four-year high in October, a report today showed.
Housing starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, according to Commerce Department figures. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years.
Sales of existing homes rose 2.1 percent in October, and the median price rose from a year earlier as inventories dropped to the lowest level in almost a decade, the National Association of Realtors said yesterday. The National Association of Home Builders/Wells Fargo index of builder confidence increased to a six-year high in October.