Tags: Bernanke | High | Unemployment | Housing | Restrain | Growth | us

Bernanke: Unemployment, Housing Restrain Growth

Friday, 29 Apr 2011 12:52 PM

Federal Reserve Chairman Ben Bernanke said high levels of joblessness and home foreclosures are restraining the U.S. recovery and putting many people and communities at risk of being “left behind.”

“The broader economy is in a moderate recovery, and we have recently seen some welcome, if gradual, improvement in the labor market,” Bernanke said in a speech today in Arlington, Virginia. “But our economy is far from where we would like it to be, and many people and neighborhoods are in danger of being left behind.”

Bernanke’s comments on the economy echoed remarks he made two days earlier at the Fed’s first regular press conference after a monetary policy meeting. The chairman signaled this week that the Fed would maintain record monetary stimulus after completing $600 billion of Treasury purchases as scheduled in June.

“Unemployment remains quite high, particularly among minorities, the young and those with less education,” Bernanke said today in prepared remarks at a Fed conference on community development. While the broader U.S. jobless rate declined to 8.8 percent in March from November’s 9.8 percent, Fed officials aim for a long-run goal of 5.2 percent to 5.6 percent.

In addition, the housing market is “also holding back the recovery,” Bernanke said. “The foreclosure rate remains very high, and many homeowners who have avoided foreclosure find themselves ‘under water,’ meaning their mortgage debt exceeds the value of their homes,” he said.

Property Values

A report this week showed residential real-estate prices dropped in the 12 months through February by the most in more than a year, putting the market on the verge of eclipsing the nadir reached during the U.S. recession. The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent from February 2010, the biggest year-over-year decline since November 2009.

CoreLogic Inc. last month estimated about 1.8 million homes were delinquent or in foreclosure, a so-called “shadow inventory” set to add to the 3.5 million existing homes already on the market.

The Fed, besides using its bank-regulation and monetary- policy authorities to help Americans, will keep working with community groups and businesses to provide research, data and other support, Bernanke said.

Bernanke’s characterization of growth as “moderate” and the labor market as “improving gradually” echoes the Federal Open Market Committee’s April 27 statement. Bernanke said at his press conference that the Fed would initially hold its balance sheet steady after completing the bond purchases.

“We are digging ourselves out of a deep hole,” Bernanke said on April 27, referring to the jobs lost during the recession.

The chairman devoted most of his speech to discussing results from a Fed survey of consumers’ finances, as well as efforts by community groups around the U.S. to prevent foreclosures and help small businesses get loans.

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Federal Reserve Chairman Ben Bernanke said high levels of joblessness and home foreclosures are restraining the U.S. recovery and putting many people and communities at risk of being left behind. The broader economy is in a moderate recovery, and we have recently seen...
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2011-52-29
Friday, 29 Apr 2011 12:52 PM
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