Federal Reserve Chairman Ben S Bernanke said the worst US recession since the 1930s has probably ended, while warning that growth may not be strong enough to quickly reduce the unemployment rate.
“Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” Bernanke said today at the Brookings Institution in Washington, responding to questions after a speech.
The remarks by the Fed chief followed a report today showing retail sales surged last month by the most in three years, adding to evidence of a recovery. The central bank has kept the benchmark lending rate as low as zero since December and in August said “exceptionally low” rates are likely warranted for “an extended period.”
“Unemployment will be slow to come down” if growth turns out to be “moderate” and not much more than the economy’s underlying potential, Bernanke said.
The central bank in March authorized $1.45 trillion in purchases of mortgage-backed securities and other housing debt this year. Policy makers decided last month to taper off a $300 billion program buying US Treasuries through October, while debating a similar move for MBS purchases. Bernanke convenes the next meeting of Fed policy makers Sept 22-23 in Washington.
The economy will rebound at a 2.3 per cent pace next year, according to the median estimate in a Bloomberg News survey of economists. The growth rate won’t be fast enough to lower the unemployment rate below 9 per cent, the economists predict.
