04 October 2011 17:26 [Source: ICIS news]
WASHINGTON (ICIS)--The ?xml:namespace>
In presenting his regular semi-annual economic outlook before the Joint Economic Committee of Congress, Bernanke said that while there have been some positive developments in the nation’s economy, other and more persistent downside factors “continue to restrain the pace of recovery”.
Consequently, he said, the Fed “now expects a somewhat slower pace of economic growth over coming quarters than it did at the time of the June meeting”, referring to the central bank’s rate-setting conference earlier this year.
He also cautioned that the Greek debt and euro crisis in Europe pose ongoing risks to
Despite some gains in manufacturing production, growth in exports and business spending on equipment, the Fed chief said that “nevertheless, it is clear that, overall, the recovery has been much less robust than we had hoped”.
Bernanke noted that the slow pace of recovery was due in large part to consumers’ worries about their economic futures, a condition that both reflects the sluggish economy and slows it further.
“Households have been very cautious in their spending decisions,” he said, “as declines in house prices and in the values of financial assets have reduced household wealth”.
“Many families continue to struggle with high debt burdens or reduced access to credit,” he said, adding: “probably the most significant factor depressing consumer confidence, however, has been the poor performance of the job market.”
Noting that the
Although he did not predict a specific US gross domestic product (GDP) pace for the second half of this year, neither did the Fed chairman offer any suggestion that second half GDP growth would be any better than the first half’s performance, which was under 1%.
He also appeared to suggest that there would not be sufficient jobs growth in months ahead to bring down the unemployment rate, noting that private payrolls rose by only some 100,000 jobs per month on average over the US summer months, including zero jobs growth in August, “half of the rate posted earlier in the year”.
The nation needs to add about 150,000 new jobs each month just to accommodate new workers entering the market. To begin lowering the unemployment rate, the economy should be adding 200,000 to 300,000 new jobs each month.
As he has in earlier economic outlook testimony, Bernanke again noted that the
In the financial sphere, he said that while things have improved since the depth of the 2008-2009 recession, “credit remains tight for many households, small businesses and residential and commercial builders”.
“We also have recently seen bouts of elevated volatility and risk aversion in financial markets, partly in reaction to fiscal concerns both here and abroad,” he said.
“Concerns about sovereign debt in
“It is difficult to judge how much these financial strains have affected
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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