Fed Chief Ben Bernanke calls it: says U.S. recession likely over.
(NYT) WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, said Tuesday that it was “very likely” that the recession had ended although he cautioned that it could be months before unemployment rates dropped significantly. See FT.com report here.
“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 as many people will still find that their job security and their employment status is not what they wish it was,” Mr. Bernanke said in response to a question about unemployment trends. “That’s a challenge for us and all policy makers going forward.”
The cautiously optimistic assessment came at the end of a speech at the Brookings Institution observing a year after a market crisis that was precipitated by the collapse of the investment bank Lehman Brothers. Shortly before the speech, the Commerce Department reported that retail sales had surged in August as consumers swapped old cars for new ones under the “cash-for-clunkers” program. The increase, by a seasonally adjusted 2.7 percent rate over the previous month, widely surpassed analysts’ expectations and was the largest monthly increase since January 2006. Mr. Bernanke said the consensus of economic forecasters was for moderate economic growth for the remainder of this year and next, particularly as credit markets thaw, consumer confidence takes time to heal and the federal government begins to unwind spending and lending programs intended to mend the economy.
“The general view of forecasters is that growth in 2010 will be moderate, less than you might expect given the depth of the recession,” Mr. Bernanke said, because of several issues, including continuing financial and credit problems, deleveraging by households and the need to end the economic stimulus programs. All these elements will “make the 2010 recovery moderate, in particular not much faster than the underlying growth rate of the economy,” he added. Read more here.
