Federal Reserve Chairman Ben Bernanke today expressed support for a new federal stimulus package from Congress to help boost overall spending in the U.S. economy and improve credit access for consumers and other borrowers.
With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate, Mr. Bernanke said in testimony before the House Budget Committee this morning.
Mr. Bernanke would not say how large the government spending package should be, but he did think the amount should be significant, aimed at stimulating economic activity in the near term.
In response to questions, Mr. Bernanke declined to say whether he believed the U.S. economy is technically in recession. We are in a serious slowdown, he said. Whether its called a recession or not is of no consequence.
He also predicted there would be solid gains in economic activity and employment because of ongoing (monetary policy stimulus) efforts by the federal government, an eventual stabilization in housing markets, improvement in credit markets and the underlying strengths and recuperative powers of our economy.
The time needed for economic recovery, however, will depend greatly on the pace at which financial and credit markets return to more normal functioning, Mr. Bernanke added. Because the time that will be needed for financial normalization and the effects of ongoing credit problems on the broader economy are difficult to judge, the uncertainty currently surrounding the economic outlook is unusually large.