The American Economy Is Recovering, But It’s Not There Yet – Bernanke
In a series of statements made before the state government authorities, Bernanke noted that financial problems at the local level have a negative effect on national economic recovery.
“We have made a long way to full recovery of the economy and many Americans are affected by unemployment, mortgage and loss of savings,” said Bernanke.
The Fed chief noted that consumer spending should increase in future quarter, with rising incomes and improving lending conditions, and this will contribute to recovery, even if government stimulus measures are withdrawn.
The Fed boss believes that inflation will remain low in coming years due to government measures.
In the banks, the losses arising from bad loans appear to have reached their peak, but the financial situation of credit institutions will continue to be affected by this status, Bernanke said.
He added that the European sovereign debt crisis has contributed to tensions in the financial sector, even if the stress tests for banks has tempered fears.
United States experienced growth in the last four quarters, but the pace of recovery has slowed to 2.4% in April-June period and developments fueled speculation that the Fed will have to unfold new incentives.
Currently, the U.S. monetary policy rate is near zero, and to combat the financial crisis the Fed has taken extraordinary measures to support financial markets, including massive purchases of government bonds.11