WASHINGTON Central bank chief Ben Bernanke once criticized Japan for dithering with its economic crisis. Now he tells the world he needs time to think.
U.S. employment data due on Friday could make the clock tick very loudly for the Federal Reserve chairman.
Bernanke disappointed some financial market participants last week when he declined to give details on how the Fed could lift a U.S. economy moving ahead at stall speed.
Most economists expected his widely anticipated speech in Jackson Hole, Wyoming, would at least give a tour of his monetary toolkit.
Instead, he only offered a promise that policymakers will take an extra day to think things over at the Fed's September policy meeting.
Meanwhile, Friday's data is expected to show U.S. job growth was so weak during August that a higher unemployment rate could be around the corner.
"That number, if it does come in weak, will make the September meeting very interesting," said Jeff Greenberg, an economist at Nomura Securities in New York.
U.S. job growth in August is expected to have risen a tepid 80,000 in August, with the unemployment rate clinging to 9.1 percent, according to a median of economists' forecasts captured in a Reuters poll.
Projections ranged from a drop of 25,000 to a gain of 160,000.
While the payroll figure will be depressed by 46,300 workers who were idled by strikes during the government's payroll survey period -- including some 45,000 at Verizon Communications, it's unlikely to lift the gloom over the outlook.
READING FED TEA LEAVES
In Bernanke's defense, while he faces giant expectations to steer the developed world away from another recession, he is very alone right now.
The U.S. Congress appears in little mood to help the economy by boosting spending. European leaders are squabbling over who pays the bills for their debt crisis. Japan is locked in political paralysis.
Yet it's not totally clear what Bernanke is waiting for.
The economic outlook is blurry. While U.S. consumers and factory managers have a very dismal outlook, measures of actual production look more sound if not particularly heart-warming.
So, he could be waiting for unequivocal signs a recession is coming before acting.
Or he might be biding time to build a case within the central bank for bolder action. Earlier this month, three Fed policymakers dissented on the central bank's promise to keep interest rates near zero for the next two years.
Dissent like that is very rare for the American central bank, which usually operates by consensus. (In a sign of the uncharted territory the Fed now sails, making a such a pledge on rates is even more rare).
Seeking details on what Bernanke and his colleagues at the Fed are thinking, economists will scrutinize the minutes of the central bank's August meeting, which will be published on Tuesday.
The minutes could give clues on whether growing dissent will delay or mute future action. They might also fill some of the gaps in Bernanke's speech, such as which policy tools officials might be leaning toward using.
ECHOES OF JAPAN
Some economists worry U.S. policymakers are not taking seriously enough the gravity of their situation.
The Fed appears wary to wheel out the big guns of its policy arsenal -- further bond purchases -- in part because deflation does not seem an imminent risk.
But a failure to head off any building weakness could put the risk of a spiral of falling prices back on the radar. Deflation can cripple economy by leading consumers to pull back on spending and businesses to cut new investments.
Capital Economics, an economic consultancy, sees a lot of parallels between America now and deflation-striken Japan in the 1990s, which Bernanke once criticized for a half-hearted policy response.
"There is a much bigger risk than most realize that the U.S. will endure a lost decade and, eventually, deflation," Capital Economics economist Paul Dales wrote in a research report.
Dales points out that Japan didn't firmly slip into deflation until nearly a decade after its own property bubble popped. Japan never really recovered.
In a 1999 academic paper, Bernanke said Japan's problems were due to policymakers' self-induced paralysis.
He made clear in his Jackson Hole speech on Friday that he was concerned about the weak economy, particularly about the plight of the long-term jobless because their atrophying skills could deal lasting damage to the economy.
He said it was important to boost employment before that damage takes hold.
The jobs report on Friday might inject a new sense of urgency to that task.
(Editing by Gary Hill)