It’s hard to see how the economic turmoil in Turkey and Argentina could damage the growth prospects of the United States in any serious way, former Federal Reserve Vice Chairman Alan Blinder told NBR.
“The Fed looks at that and thinks, ‘It’s too bad for these countries and it would be nice if it was better,’ but it’s not really relevant to the United States,” Blinder said in the interview Wednesday.
Inflation isn’t a burning issue for the Fed either, according to Blinder: “Inflation is running below the Fed’s target, so I don’t think they’re very worried about that right now.”
As for what the Fed does need to worry about, Blinder believes the soggy labor market is going to be incoming Federal Reserve Chair Janet Yellen’s main concern. The inconsistency between the employment rate decreasing and weakness in the labor market will top the agenda, he said.
Blinder, who is also a professor of economics and public affairs at Princeton University, doesn’t think the economy’s growth will be hindered by the Fed’s quantitative easing program, which is being scaled back by the central bank. While some are concerned that the pace of tapering is either too weak or too aggressive, Blinder said nobody knows the perfect formula.
When asked about Ben Bernanke’s tenure as Fed chairman, Blinder called his actions imaginative, creative and brave. “He was getting a lot of criticism into the recovery period because it was such a weak recovery, and he was trying to do very unusual and unprecedented things.” Blinder believes Bernanke saved the economy from oblivion.