Bernanke: U.S. has long way to go on economic recovery
By Ariana Eunjung Cha
The country has a "considerable way to go to achieve a full recovery in our economy," Federal Reserve Chairman Ben Bernanke said in a speech Monday to state and local government officials in Charleston, S.C.
In his first public remarks since a government report on the gross domestic product on Friday showed that the recovery may have lost momentum, Bernanke said financial conditions "have become somewhat less supportive of economic growth in recent months."
GDP, the broadest measure of economic activity, grew at a 2.4 percent annual rate in the April-through-June period, the government said Friday, down from 5 percent at the end of 2009 and 3.7 percent at the beginning of this year.
Bernanke's remarks came during the annual meeting of the Southern Legislative Conference of the Council of State Governments.
The fed chief pointed to a decline in tax revenues in local jurisdictions around the country as contributing to the sluggishness in growth. "Over the past year, numerous state governments have laid off or furloughed employees, decreased capital spending, and reduced aid to local governments," he said. "Indeed, state and local payrolls have fallen by more than 200,000 jobs from their peak near the end of 2008."
Bernanke's assessment of the overall economic picture was similar to what he told Congress last month. He declared the financial crisis "mostly behind us," with "the economy stabilized and expanding again." He said that while the support to the economy from the stimulus will diminish over time, rising demand from households and businesses should help sustain growth.
Bernake said real consumer spending seems likely to pick up in the coming quarters and that credit conditions will improve.
In the business sector, investment in equipment and software has been increasing rapidly. He also mentioned that there was good news in U.S. exports, which are rising.
Ariana Eunjung Cha
August 2, 2010; 11:39 AM ET
Categories: Federal Reserve , U.S. Economy
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