Bernanke said “significant economic challenges remain”

Tuesday, November 17, 2009, 12:52 AM | Leave Comment

It seems that the U.S. economy is on a longer path of recovery than previously expected. It was apparent from the Federal Reserve Bank chairman, Mr. Bernanke’s speech who indicated significant economic challenges remain and that the central bank’s extended period of low borrowing costs may get even longer. Speaking in New York yesterday, he said the major reasons are lending constrained and the jobless rate above 10 percent.

The labor market is an “area of great concern,” Bernanke, 55, a former Princeton University economics professor, told financial executives in Manhattan at a luncheon hosted by the Economic Club of New York.

“Jobs are likely to remain scarce for some time, keeping households cautious about spending,” he said. While payrolls will increase as the economy recovers, unemployment “likely will decline only slowly if economic growth remains moderate, as I expect.”

Exit Strategy
Yesterday, he devoted one sentence of his speech to the Fed’s exit strategy, saying in part that the central bank “will calibrate the timing and pace of any future tightening to best foster maximum employment and price stability.”

In a Nutshell
It seems that the recovery is not going to be easy. Folks who have lost jobs must get back in the job market and be gainfully employed before we see some real “signs” of recovery.

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