Bernanke Offers No New Measures To Boost Economy
Chairman Ben Bernanke is proposing no new steps by the Federal Reserve to boost the U.S. economy while hinting that Congress may need to act to stimulate hiring and growth.
Bernanke said Friday that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run. He is speaking at an annual economic conference in Jackson Hole, Wyo.
Fed policymakers "will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability," Bernanke said in his prepared remarks.
Bernanke said that while the growing national debt "must urgently be addressed," the administration and Congress "should not, as a consequence, disregard the fragility of the current economic recovery."
He added, "To the fullest extent possible, our nation's tax and spending policies should increase incentives to work and to save, encourage investments in the skills of our workforce, stimulate private capital formation, promote research and development, and provide necessary public infrastructure."
Bernanke also was critical of Congress' handling of this summer's battle over raising the debt ceiling. He said it disrupted the economy, and another episode like that could have long-term negative consequences.
His speech follows news that the economy grew at an annual rate of just 1 percent this spring and 0.7 percent for the first six months of the year. Only slightly healthier expansion is foreseen for the second half.
Bernanke said he's optimistic that the job market and the economy will return to full health in the long run.
Stocks fell after Bernanke began speaking. Hopes had been building on Wall Street for some kind of announcement from Bernanke of additional steps to get the economy going again.
The Dow Jones industrial average, which was down 69 points before the speech, was down 142 points, or 1.3 percent, in mid-morning trading.
Bernanke's speech comes at a critical moment for the economy. Some economists worry that another recession might be near.
A big reason is that consumer spending has slowed. Home prices are depressed. Workers' pay is barely rising. Household debt loads remain high.
All that, compounded by Europe's debt crisis, has spooked the stock markets and unnerved consumers. Congress is focused on shrinking deficits and seems unlikely to back any new spending to try to energize the economy.
That's why many have looked with anticipation to the Fed to do more. The central bank has already kept short-term interest rates near zero for 2 1/2 years. And earlier this month, it said it would keep them there through mid-2013.