por admin » Jue Feb 02, 2012 9:48 am
BUSINESSFEBRUARY 2, 2012, 10:10 A.M. ET.Bernanke: U.S. Must Address Fiscal Issues
By COREY BOLES And JEFFREY SPARSHOTT
Setting U.S. fiscal policy on a sustainable path that ensures debt to national income is at least stable if not declining should be a "top priority" of Congress, Federal Reserve Chairman Ben Bernanke told lawmakers Thursday.
Testifying before the House Budget Committee, the Fed chief pointed to the sovereign-debt crisis that has consumed Europe for more than a year. He warned of the importance of the need to address the fiscal challenges facing the U.S., saying "interest rates can sour quickly if investors lose confidence in the ability of a government to manage its fiscal policy."
Mr. Bernanke reiterated a decidedly bearish tone on the economic recovery more generally, in keeping with recent communications from the Federal Reserve. He described the pace of recovery as "frustratingly slow," although he said the Fed anticipated higher levels of growth in the coming year than were seen in 2011.
Consumers continue to face "significant headwinds," Mr. Bernanke said, forecasting that while consumer sentiment has improved from last summer's "depressed levels," it remains at levels that are low by historical standards.
He said household spending will remain heavily dependent on developments in the labor market, which despite recent improvements has a long way to go until it can be considered to be operating "normally."
The housing market remains troubled, as a "persistent supply of vacant homes, largely stemming from foreclosures, is keeping a downward pressure on prices and limiting the demand for new construction."
The outlook for the business sector, on the other hand, is a "relative bright spot," Bernanke said. Manufacturing continues to expand and capital spending by businesses has increased.
Last week, at a quarterly press conference, Mr. Bernanke signaled the Fed could embark on another round of bond buying depending on how the economy develops. In his opening remarks at Thursday's hearing, he didn't address this issue directly.
He did speak about the Fed's inflation expectations, saying he expected inflation to remain subdued. Opponents of previous bond-buying activities by the Fed, known as quantitative easing, routinely cite fears that the actions are in effect printing money that will lead to higher inflationary pressures on the economy.