Bernanke says global economy ‘beginning to emerge’ from recession
Ben Bernanke, chairman of the Federal Reserve, at the Jackson Lake Lodge in Wyoming, where central bankers are meeting to discuss the global economy.
Speaking at an annual symposium in Jackson Hole, Wyo., Bernanke echoed a statement made by the Fed earlier this month, saying that “economic activity appears to be leveling out, both in the United States and abroad.”
Bernanke went a step further though, indicating that “prospects for a return to growth in the near term appear good.”
But the central bank chief warned that problems remain in financial markets around the globe, and that with banks facing “substantial” additional losses ahead, businesses and consumers will continue to have trouble accessing credit.
“Because of these and other factors, the economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels,” he cautioned.
Fed watchers said they were not surprised by Bernanke’s somewhat cautious outlook. They said the Fed chairman doesn’t want to be pushed into raising interest rates or pulling back on other stimulus the Fed has pumped into the economy over the past year.
“The challenge he has now is that if he times the exit strategy too early, you risk a new recession a year or more from now.” said Lakshman Achuthan, managing director of Economic Cycle Research Institute.
But Sung Won Sohn, economics professor at Cal State University Channel Islands, said he doesn’t believe that Bernanke is playing an expectation game.
Sohn thinks Bernanke is truly worried about a weak recovery, despite some forecasts of strong gains ahead. He said the Fed chairman is right to be concerned since consumers have yet to really resume spending.
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