Bernanke Cautious on Economic Growth - Image: Gage Skidmore (Flickr.com CC-BY-SA 2.0)
In spite of the Middle East and North African uprisings contributing to skyrocketing oil prices in recent weeks and the poor state of the house market, Ben Bernanke, the Fed Chairman, remained in bullish mood about the overall state of the economy in his testimony today at Capitol Hill.
His outlook could be described as one of extremely cautious optimism as he talked up evidence of a slow recovery and an incrementally rising and gradually self-sustaining confidence in business and consumer spending. One of his main concerns, and the reason for the long, drawn out recovery that seems to have setin, was the snail-like pace of new job creation.
He also, once again, defended the Fed’s policy of quantitative easing and the fiscal stimulation program, urging that it would be too soon to curb that much needed boost for the economy.
Republicans are fearful that the measures will boost inflation thus damaging the tentative recovery, but Bernanke argues that the growth is a more important factor at present when it comes to adding much-needed momentum to the recovery.
If citing the rate of decline of unemployment is a positive, then the Fed chief is prepared to push it. However,
Bernanke found it almost impossible to place any positive spin on the dire housing market and construction industry. With prospective homebuyers struggling to find mortgages, and the potential for house prices to continue to fall, the outlook for that sector was still looking depressed.
He appeared relatively worried about the recent price increases of commodities such as oil and basic foodstuffs, but not overly so, claiming that, at most, this could lead to a slight rise in consumer inflation. Of more concern to growth plans would be if the price rises continued unchecked for a sustained period.
