WASHINGTON — The U.S. economy should continue to recover at a moderate pace this year, but it will take time to restore all the jobs lost during the recession, Federal Reserve Chairman Ben Bernanke said Wednesday.
In his latest assessment of the economy, Bernanke told a congressional committee that the pace of the recovery this year will depend on whether consumers spend and companies invest enough to make up for fading government support.
“On balance, the incoming data suggest that growth in private final demand will be sufficient to promote a moderate economic recovery in coming quarters,” Bernanke told the Joint Economic Committee.
The U.S. economy is slowly emerging from its worst recession since the 1930s Great Depression that followed the Wall Street crash. Although recent reports have shown some pickup in the jobs market, the economy continues to be hampered by high unemployment and a weak housing sector. The slow pace of growth is keeping prices under wraps, allowing the Fed to maintain interest rates close to zero to bolster the recovery.
In response to a lawmaker’s question, Bernanke repeated the Fed’s pledge to keep interest rates at a record low for an “extended period” to continue aiding the recovery. He reiterated what Fed officials said in their latest policy meeting March 16, which is that “extended period” depends on how the economy develops and isn’t dependent on a time frame.
Some investors Tuesday speculated Bernanke could signal that the Fed may be moving closer to raising rates because of the improving economy.
“We strongly believe that the current policy language has legs, long legs,” said Larry Meyer, a former Fed board governor, adding he doesn’t expect rates to rise until well into 2011.
