Tags: bernanke | threats | recovery

Bernanke Sees Formidable Threats to Recovery

Monday, 07 Dec 2009 12:59 PM

Despite some economic improvements, Federal Reserve Chairman Ben Bernanke warned Monday it's still too soon to declare that the budding recovery will last.

"We still have some way to go before we can be assured that the recovery will be self sustaining," Bernanke said in prepared remarks to the Economic Club of Washington.

The Fed chief repeated his belief that the recovery will continue at least into next year. But he cautioned that the economy is confronting some "formidable headwinds" — including a weak job market, cautious consumers and still-tight credit.

Those forces "seem likely to keep the pace of expansion moderate," he said.

Some private forecasters continue to worry that the recovery could fizzle last next year as government stimulus fades.

A cautiously optimistic Bernanke said he expects "modest" economic growth next year. That should help push down the nation's unemployment rate — now at 10 percent — "but at a pace slower than we would like," he acknowledged.

Under one Fed forecast released last month, the jobless rate would remain stubbornly high next year — ranging from 9.3 to 9.7 percent. The Fed has warned that it could take five or six years for the job market to return to normal.

To nurture the recovery, the Fed has kept rates at record low near zero for a year. The central bank is widely expected to leave rates at those super-low levels at its meeting on Dec. 15-16. By doing so, the Fed hopes to entice people and businesses to boost spending, which would aid the recovery.

Despite all the negative forces, consumers recently have shown their resilience and kept spending. Home sales have firmed helped by the government's tax buyer credit. Car sales were aided by the government's now-defunct Cash for Clunkers rebates.

Business spending on new equipment and software also showed signs of stabilizing, and better economic conditions abroad have boosted U.S. exports.

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Despite some economic improvements, Federal Reserve Chairman Ben Bernanke warned Monday it's still too soon to declare that the budding recovery will last."We still have some way to go before we can be assured that the recovery will be self sustaining," Bernanke said in...
bernanke,threats,recovery
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2009-59-07
Monday, 07 Dec 2009 12:59 PM
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