WASHINGTON — Shrugging off last week’s dismal May jobs report, Federal Reserve Chairman Ben Bernanke said Tuesday that he expects the U.S. economic recovery to revive later this year as headwinds from outside factors ease.
Speaking at an international monetary conference in Atlanta, Bernanke said high energy prices and spillover effects from the devastating natural disasters in Japan have hurt U.S. growth since April.
But these headwinds, which help explain the weak 54,000 jobs added in May, are likely to “dissipate in coming months,” and “growth seems likely to pick up somewhat in the second half of the year,” the chairman said.
“Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers,” Bernanke said.
In a highly unusual move, the chief executive of JPMorgan Chase, the strongest U.S. bank, confronted Bernanke during a question-and-answer session. Jamie Dimon read a long list of regulatory and market fixes to the problems that brought the global financial system to its knees in 2008, then complained about a 3 percent global tax being considered on large banks.
“Has anyone bothered to study the cumulative effect of these things?” Dimon asked in a rare public confrontation with the world’s most powerful central banker. “Is this holding us back” from a more robust economic recovery?
Bernanke shot back that the financial regulations being put in place are the “most comprehensive reform since the 1930s” and are warranted, given the severe financial crisis the global system has suffered through in recent years.
Private-sector economists in recent weeks have scaled back their growth projections, which had been as high as 3.5 percent for the year, and many are now projecting an annual growth rate of 3 percent or less.
That would suggest hiring is apt to be tepid, and there would be insufficient economic activity to bring down the jobless rate, now at 9.1 percent.
Bernanke signaled clearly that he plans to keep interest rates low and said there aren’t yet signs that the U.S. economy can stand on its own feet without what the Fed calls “accommodative” policies to spark lending and investment.
The chairman ended his speech with a caveat.
“Although it is moving in the right direction, the economy is still producing at levels well below its potential. Consequently, accommodative monetary policies are still needed. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he warned.
