Ben Bernanke said on Capitol Hill Wednesday, the pace of the US economy 'will pick up in coming quarters.' But the unemployment rate will decline slowly, he said, citing 'headwinds.'
The pace of the US economy "will pick up in coming quarters," but the relatively high unemployment rate will decline "only slowly" because of "headwinds," Federal Reserve Board Chairman Ben Bernanke said Wednesday.
The Fed’s latest forecast means that the jobless rate by the end 2012 will be high enough that it could imperil President Obama’s reelection bid.
Delivering his semi-annual report on monetary policy and the state of the economy, Mr. Bernanke told the House Financial Services Committee that the Fed would act to stimulate America's economy if such action were needed.
“The possibility remains that the recent economic weakness may prove more persistent than expected,” Bernanke said. “The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate."
The Fed chairman noted that US economic growth in the first half of 2011 was “modest.” The central bank predicts growth in inflation-adjusted economic output of 2.7 to 2.9 percent for 2011, and 3.3 to 3.7 percent in 2012. The latest forecast, completed in late June, is less optimistic than the Fed's April projection. Bernanke explained that some of his Fed colleagues “saw at least some part of the first-half slowdown as persisting for a while."