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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.

By Ariana Eunjung Cha  |  August 2, 2010; 11:39 AM ET
Categories:  Federal Reserve , U.S. Economy  
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Next: July manufacturing slows, but remains positive


Funny that is also the case with the profit locomotive gone loco... free marketing set free from any sense of social responsibility or ethical sense other than ripping everyone off to squeeze more profits out of our economic turnips whose salaries and hours have been declining for 30 years... relative to the inflation that is not supposedly happening and the business deal of reducing pay to preclude layoffs, it's your choice, but what is happening to CEO and management compensation packages up and down the food chain??

Posted by: Wildthing1 | August 2, 2010 3:38 PM | Report abuse

I suspect it will take about ten years after Obama is gone to dig out of this hole.

Posted by: jdonner2 | August 2, 2010 3:51 PM | Report abuse

There isn't any "recovery" in sight! In fact, wealthy American's and AMerican executives of multinational corporations are dumping their US citizenships at an all time record pace. US Embassies, around the world, have appointments booked up through next February, with thousands of these bloated ticks and their lawyers getting UK, German, Swiss, and other citizenships. They pay less taxes, even with the Bush tax cuts, in foreign countries and they get to free trade and job outsource the US into road kill while having a neat foreign hiddy hole in which to climb. Go read the article in todays Financial Times of London!

If we wan to end this depression, we will dump free trade, bring back the use of tariffs to protect our jobs and factories, outlaw multinational corporations, and tax the living snot out of offshore investments. Sure, we will run a few of the bloated ticks out of this country entirely, but they will be replaced by new American owned businesses, employing Americans, making products for sale in America. A country that depends between 70 and 80 percent on domestic consumption, that has, as a total, of it's manufactured exports, 5.2%, is ill served by any sort of free trade, anyways. End it!

Posted by: mibrooks27 | August 2, 2010 3:54 PM | Report abuse

He also mentioned that there was good news in U.S. exports, which are rising.<<<

Due to currency fluctuations which is not a solid foundation for recovery.

Posted by: nanonano1 | August 2, 2010 4:24 PM | Report abuse

Bernanke attempts to provide an accurate picture to the American people. He should be respected for his position and knowledge. However, some the Democrat political spin is like more “looking through rose colored glasses” and speculative fabrications.

The economy was saved by Obama stimulus “bailouts” when financial institutions were on the brink of disaster. The truth is that Wall Street firms were failing because they over extended credit. AIG insures and continues to guarantee mortgage loans to bad debt “want to be” home owners who cannot pay their loans.

Tim Geithner and Hank Paulson negotiated with private industry financial firms for a private consortium “bailout”. They talked mergers and Barclay buying Lehman but none of their proposals worked because bad assets cut their value in half.

No one wanted to make good on all the bad debt so the taxpayers got stuck with it. Who wants mortgage of loan of $200,000 when the house is worth $150,000 priced on the housing market of for sale supply but no buyer demand.

American people cannot spend because they have no earned income and their credit has “run out” on them. No credit, No income, No help from Obama. Vote Republican for Social and Economic Prosperity.

Posted by: klausdmk | August 2, 2010 5:28 PM | Report abuse

The reality is that the financial system crisis was triggered by Bernanke's attempt to normalize interest rates after the "recovery" from the last downturn. At this point we still have a financial system that is on life support and the remains of a real estate market that continues to be sustained by the ghosts of Fannie Mae and Freddie Mac. The economy has been jerked through so many gyrations by the Federal Reserve and the government trying to establish one short term policy or another that noboby has any real idea what a sustainable normal American economy would look like.

Posted by: Anonymous | August 2, 2010 6:42 PM | Report abuse

So the Chair of the Federal Reserve has a hunch that a rise in consumer demand will be required in order to compensate for the inevitable elimination of Government assistance ? And somehow, I would have expected more than hearing my own words repeated to me, 6 months later. So, is there someone else who can give the Fed the next fundamental princliple which they can reuse as part of their forecast? For I'm getting tired of helping these guys figure these things out.

Posted by: Anonymous | August 2, 2010 7:37 PM | Report abuse

Bernanke is a pathetic, lying stooge -- he missed the housing bubble, he missed the credit crisis, he missed on unemployment estimates, etc. etc. etc. And now he comes up with this garbage??

Hey Helicopter, Exactly how will wages rise (forget the coming taxes, higher unemployment, contracting economy)?

Posted by: Anonymous | August 3, 2010 1:01 PM | Report abuse

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