Bernanke offers no hints of further aid to economy
Thursday, September 8, 2011
WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Thursday that he’s surprised by how cautious consumers remain more than two years since the recession officially ended. But he offered no hints of further steps the Fed might take to try to boost the weak economy.
Bernanke noted that several factors have kept consumers from spending more: from high unemployment and falling home values to still-heavy debt loads and higher gasoline prices.
“Even taking into account the many financial pressures they face, households seem exceptionally cautious,” Bernanke said in a speech in Minneapolis to the Economic Club of Minnesota.
Stocks closed sharply lower Thursday after Bernanke’s speech.
The Dow Jones industrial average lost 119.05 points, or 1 percent, to 11,295.81. The Standard & Poor’s 500-index fell 12.72, or 1.1 percent, to 1,185.90. The Nasdaq composite shed 19.80, or 0.8 percent, to 2,529.14. Each index had posted gains earlier in the day.
Bernanke said that higher prices for gas, cars and other consumer goods were due, in part, to temporary factors, such as supply disruptions stemming from Japan’s earthquake and nuclear crisis. As those factors continue to ease, the Fed chief said he expects inflation to moderate in the coming months.
He reiterated that the Fed will consider a range of options at its next policy meeting Sept. 20-21. Some economists have said the Fed must take further steps to drive down long-term interest rates and help the economy avoid another recession.
Bernanke’s remarks Thursday were similar to those he made last month in a speech in Jackson Hole, Wyo. As he did in that speech, Bernanke said he supported Congress’ push to reduce budget deficits over the long run. But he cautioned against cutting spending excessively while the economy remains so weak.
Congress, he said, “should not ... disregard the fragility of the economic recovery.”
The economy barely grew in the first half of the year: It expanded at an annual rate of just 0.7 percent. And the government said last week that employers added zero net jobs in August.