It is very clear how last week's bad jobs report will affect the presidential race. It is less clear how it will affect policy that could create jobs. The election campaigns of President Obama and Mitt Romney have their talking points all lined up, but what Congress and the Federal Reserve do next remains murky. Federal Reserve chair Ben Bernanke will testify before Congress on the state of the economy, Reuters' Edward Krudy reports, who says it's possible the latest signs of a stalled make it more likely the Fed will do something to fix it. "This puts the Fed firmly in play and they will likely feel compelled to respond," Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, told Reuters.
The New York Times' Binyamin Applebaum agrees that the Fed "will ride again to the rescue," despite unease with the economy's apparent dependency on its help. But The Wall Street Journal's Jon Hilsenrath reports Monday that new action from the Fed isn't guaranteed. Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, is the consensus-seeker between members of the Fed who want to raise interest rates to fight inflation and others who want to take action to lower unemployment. And right now, the Journal reports, Pianalto isn't ready to change policy. She explained, "I don't think this employment report, in and of itself, is likely to lead to a substantial change in my outlook. Consequently, it would not lead me, at this time, given what I know about my outlook, to change my position on policy."