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US economy ‘far from satisfactory’: Bernanke

September 01, 2012

WASHINGTON, Aug 31: US Federal Reserve Chairman Ben Bernanke expressed deep worry over the US economy on Friday, calling the situation unsatisfactory and saying labour market stagnation was “a grave concern”.In a much-anticipated speech to central bankers in Jackson Hole, Wyoming, the chief of the US central bank offered no new promises of intervention to boost growth, but strongly signalled that he was leaning that way.

“The economic situation is obviously far from satisfactory,” he said in the keynote speech of the Fed’s annual conference of central bankers.

“Growth in recent quarters has been tepid, and so, not surprisingly, we have seen no net improvement in the unemployment rate since January,” he said.

“Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time.”

Bernanke made clear that the jobless rate, at 8.3 per cent, is one of his biggest worries as head of the central bank, which has reducing unemployment as a key goal.

“The stagnation of the labour market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.”

“Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions in a context of price stability.”

Bernanke, whose policies have been criticised by US conservative politicians, including Republican presidential candidate Mitt Romney, delivered a lengthy defence of the Fed’s intervention actions since the financial crisis.—AFP