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Federal Reserve chief tells Congress: You're making weak economy worse

Federal Reserve Chairman Ben Bernanke tells Congress that its tax hikes and spending cuts are creating 'strong headwinds' for economic recovery and could be costing 750,000 new jobs.

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US Federal Reserve Chairman Ben Bernanke delivers his semiannual monetary policy report to Congress before the House Financial Services Committee in Washington on Wednesday.

James Lawler Duggan/Reuters

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Federal Reserve Chairman Ben Bernanke said Wednesday that the US economy needs more help from the fiscal policies that Congress controls, not just from the Fed’s own stimulus efforts.

He said that the economy faces “strong headwinds created by federal fiscal policy,” and he said this “makes a big difference” in terms of jobs and the unemployment.

Appearing at a congressional hearing, Chairman Bernanke said that Congress's moves to pare back on tax cuts and federal spending are reducing the pace of economic growth by about 1.5 percentage points. For reference, the economy was growing by about 1.8 percent in the year’s first quarter.

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Bernanke said an extra 1.5 percentage points of growth could add as many as 750,000 new jobs and bring the unemployment rate from 7.6 percent to 6.9 percent.

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