WASHINGTON — Federal Reserve Chairman Ben Bernanke pointed Thursday to “increased evidence” of a self-sustaining economic recovery and strongly rejected suggestions that his policies are driving up global food prices and destabilizing Egypt and other emerging markets.
The Fed chairman was unusually upbeat on the U.S. economy’s outlook, noting in a speech at the National Press Club that “we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold.”
Pointing to data from last week showing that households boosted their spending by an annual rate of 4 percent in the final three months of 2010, Bernanke added that “the recent gains in consumer spending look to have been reasonably broad-based.”
The stock market this week reached levels not seen in more than two years. The Dow Jones industrial average closed above 12,000 Tuesday for the first time since June 2008 and has not closed below that benchmark since.
Consumption drives about two- thirds of U.S. economic activity, so anything that points to consumers picking up their spending is a hopeful sign. Employers have been waiting for firm and consistent signs of increased consumption before boosting their hiring, and monthly employment numbers are slowly improving.
Bernanke took care to repeat points he has made in the past: that inflation is well-contained and it will take quite some time for the unemployment rate to fall sharply.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Bernanke said, a day before a much-anticipated government jobs report for January.
After his speech, Bernanke took questions from reporters, a rare step for him. His predecessors all shied from the media.
He was pressed on whether the Fed’s ongoing purchase of $600 billion in Treasury bonds — a process called quantitative easing — has had the unintended consequence of raising food costs around the world and perhaps contributing to the unrest in Egypt and elsewhere in North Africa and the Middle East.
“I’m not sure I accept the prem ise,” Bernanke said, noting that weather-related constraints on food supplies might be a factor, as well as growth in demand for food in countries such as Egypt.
