NEW YORK (CNNMoney.com) - Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that the economy has started to show signs of stabilization, although he cautioned that improvement is uncertain and likely to be gradual going forward.
Bernanke also reiterated that the Fed will be able to keep inflation at bay by unwinding many of the various lending programs it has put in place to encourage banks to start lending again. But he declined to give a time frame for when the Fed might begin its so-called exit strategy.
The head of the central bank, appearing before the House Financial Services Committee in his semi-annual testimony on the state of the economy, forecast a relatively sluggish recovery.
Bernanke said the unemployment rate would be higher than preferred levels until at least 2012. But he added that steps taken by the Fed to pump money into the economy have started to pay benefits.
WASHINGTON (CNNMoney.com) - In the next six months, President Obama faces one of his biggest and most important decisions about the economy.
Should Federal Reserve Chairman Ben Bernanke keep his job?
Bernanke's term comes to an end on Jan. 31. Obama will either reappoint or replace him. And the president has been coy about his leanings.
Last month, Obama offered a strong defense of Bernanke, saying he has done a "fine job." At the same time, Obama acknowledged that the Fed had missed key aspects of the financial crisis, saying it "didn't do everything that needed to be done."
NEW YORK (CNNMoney.com) - Data suggest the economic contraction may be slowing, but the economy is hardly out of the woods, Federal Reserve Chairman Ben Bernanke told lawmakers on Wednesday.
"A number of factors are likely to continue to weigh on consumer spending, among them the weak labor market, the declines in equity and housing wealth that households have experienced over the past two years, and still-tight credit conditions," Bernanke said.
Bernanke said he still anticipates that the economy will start its recovery later this year, but cautioned that "recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring and the unemployment rate is likely to rise for a time, even after economic growth resumes."
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NEW YORK (CNNMoney.com) – Federal Reserve Chairman Ben Bernanke said Tuesday that the U.S. economy is stabilizing and will begin to rebound later this year, but the recovery will be slow and cautious.
At a hearing of the Joint Economic Committee of Congress, Bernanke said consumer sentiment, the housing market and spending have begun to show signs of life.
But he expects the economy will continue to shed jobs and credit will remain tight for some time. He said the recent frugality trend will continue due to deflated household wealth, and business spending will be slow to bounce back as well.
"We continue to expect economic activity to bottom out, then to turn up later this year," said Bernanke in prepared testimony. "Even after a recovery gets under way ... we expect that the recovery will only gradually gain
momentum and that economic slack will diminish slowly."
Bernanke said the recent gross domestic product report, which showed the economy contracted by 6.1% in the first quarter, was disappointing. But he said
the economic contraction will "moderate considerably in the near term and recover later this year," as businesses look to replace their liquidated inventories.
NEW YORK (CNNMoney.com) - Federal Reserve Chairman Ben Bernanke said Tuesday he sees "tentative signs" that the economy's dramatic decline is easing, but that full recovery won't come until the financial system is stabilized.
"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing," Bernanke told students and faculty of Morehouse College in Atlanta.
Bernanke said "a leveling out of economic activity is the first step toward recovery." But an economic recovery will not be sustainable "without a stabilization of our financial system and credit markets," he added.
Among the positive indicators Bernanke mentioned were recent upticks in home sales and new home construction. He also pointed to improvements in consumer spending, notably sales of new vehicles.
NEW YORK (CNNMoney.com) - Federal Reserve Chairman Ben Bernanke said on Sunday that government officials are laying the groundwork for an economic revival and that a "depression" can be avoided – acknowledging however that a full recovery will take time and that there are still obstacles.
"We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time," Bernanke said in a rare public interview airing on "60 Minutes," according to a transcript released by CBS.
When asked about the risks of a "new American depression," Bernanke responded, "I think we've averted that risk. I think we've gotten past that."
NEW YORK (CNNMoney.com) - Federal Reserve chairman Ben Bernanke said Tuesday that economic recovery hinges on stabilizing the financial system, and proposed new policies aimed at absorbing financial shocks in the future.
"Until we stabilize the financial system, a sustainable economic recovery will remain out of reach," Bernanke said in prepared remarks.
Bernanke said governments around the world must work together to address problems associated with financial institutions deemed too big to fail. These large, interconnected financial institutions that pose a "systemic risk" to economic stability, he said.
(Fortune) - Lawmakers want to know who's pocketing the money taxpayers have spent to prop up AIG.
Rep. Carolyn Maloney, D-N.Y., on Wednesday demanded that Federal Reserve chief Ben Bernanke provide a full accounting of the firms that have received federal funds in their dealings with AIG (AIG, Fortune 500) since last fall's brush with bankruptcy.
The letter - which seeks to unmask the AIG trading partners that benefited from the billions of dollars the government has extended - comes a day after Bernanke expressed frustration with the firm, which has received more than $150 billion in federal help over the past six months.
"If there is a single episode in this entire 18 months that has made me more angry, I can't think of one other than AIG," Bernanke told the Senate Budget Committee Tuesday. "This was a hedge fund, basically, that was attached to a large and stable insurance company, made huge numbers of irresponsible bets - took huge losses. There was no regulatory oversight because there was a gap in the system."
NEW YORK (CNNMoney.com) - Federal Reserve Chairman Ben Bernanke said Tuesday that President-elect Barack Obama's proposed fiscal stimulus package could help the economy, but he added that additional bailouts of financial institutions may also be needed to bring about a sustained economic recovery.
Bernanke, speaking in London, said in his prepared remarks that the nearly $800 billion plan being discussed by the incoming Obama administration and the newly elected Congress "could provide a significant boost to economic activity." He did not comment on or endorse any specifics of the nearly $800 billion.
But Bernanke cautioned that the plan is "unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system."