US recovery could take years, warns Bernanke
Friday 04 February 2011
Ben Bernanke, the chairman of the US Federal Reserve, said he would not consider the US economic recovery to be fully established until unemployment began to fall sharply, and that could still take several years.
In remarks which signalled the central bank will maintain its accommodative monetary policy for the foreseeable future, Mr Bernanke acknowledged recent encouraging signs from the labour market but said employers remained reluctant to hire.
His comments came the day before the Labour Department was due to release employment data for January. Economists are expecting today's figures to show 150,000 new jobs were created last month, but that the US unemployment rate ticked up from 9.4 per cent in December to 9.5 per cent, as people returned to the workforce.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," Mr Bernanke said in a speech to the National Press Club in Washington. "Although economic growth will probably increase this year, we expect the unemployment rate to remain stubbornly above, and inflation to remain stubbornly below, the levels that Federal Reserve policymakers have judged to be consistent over the longer term with our mandate."
The Fed is midway through a $600bn programme of quantitative easing, buying US Government bonds in an attempt to hold down interest rates and stimulate activity in the world's largest economy. Official US interest rates have been held at zero since December 2008, forcing the central bank to adopt additional unconventional measures to affect market rates.
Mr Bernanke predicted stronger economic activity this year, and new data out yesterday supported an optimistic case. The Institute of Supply Management's non-manufacturing index showed US service sector industries expanding at the fastest pace since August 2005. The index is regarded as the best measure of the service sector.
There was also strong data from the manufacturing side of the economy, with the Commerce Department showing US factory orders rose unexpectedly in December.
Zach Pandl, US economist at Nomura, said: "I think both reports indicate that growth momentum in the US remains very strong."
Missing Malaysia Airlines Flight MH370: Wreckage could be found within a week as search reaches 'very critical juncture', says minister
South Korea ferry disaster: Released transcripts show chaos and confusion in the moments before ferry sinks
Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
Loch Ness Monster found on Apple Maps?
South Korea ferry disaster: Families watch as remains of Sewol victims returned to shore
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
An open letter to Nigel Farage: you may smile, but I am not seduced
Abdullah Deghayes: My son was the martyr of a just cause, says father of British teenager killed in Syria conflict
- 1 Jose Mourinho: Graceless reaction of Chelsea manager a sad effort to hide his own flaws
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
- 4 Loch Ness Monster found on Apple Maps?
- 5 Shropshire criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
iJobs Money & Business
Negotiable: Harrington Starr: Database Team Lead ( Leadership, Sybase, Compute...
£40000 - £50000 per annum + Bonus+Benefits+Package: Harrington Starr: C#.NET D...
£25000 - £35000 per annum + Bonus+Benefits+Package: Harrington Starr: VB.NET S...
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: Trade Suppor...