Bernanke Sees Job Creation Vital to Sustained Recovery
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Federal Reserve Chairman Ben Bernanke said Thursday that the U.S. economy will not be able to fully recover from the recession until hiring improves.
Bernanke told the National Press Club on Thursday that the economy is getting stronger, and the return to spending by consumers and businesses with push a faster pace of growth this year. But the Fed chairman said that the growth will hit a wall until the high unemployment rate is driven down.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," Bernanke said.
The improvement in the unemployment rate needed will not come for "several years" according to Bernanke. He said last month that it would take four to five years for the unemployment rate to come back down tot he historically normal levels of 5.5-6 percent.
The comments from Bernanke come one day before the government releases nonfarm payroll statistics for January, as economists are projecting the unemployment rate rising to 9.5 percent last month, as the economy added 146,000 jobs.
Job creation would need to be twice as fast on a monthly basis to create a noticeable dent in the unemployment rate.
Bernanke also warned that the big deficits facing the U.S. could also hurt the economy, as higher borrowing costs could hurt consumer and business spending.
"If government debt and deficits were actually to grow at the pace envisioned, the economic and financial effect would be severe," Bernanke added.
Bernanke told the National Press Club on Thursday that the economy is getting stronger, and the return to spending by consumers and businesses with push a faster pace of growth this year. But the Fed chairman said that the growth will hit a wall until the high unemployment rate is driven down.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," Bernanke said.
The improvement in the unemployment rate needed will not come for "several years" according to Bernanke. He said last month that it would take four to five years for the unemployment rate to come back down tot he historically normal levels of 5.5-6 percent.
The comments from Bernanke come one day before the government releases nonfarm payroll statistics for January, as economists are projecting the unemployment rate rising to 9.5 percent last month, as the economy added 146,000 jobs.
Job creation would need to be twice as fast on a monthly basis to create a noticeable dent in the unemployment rate.
Bernanke also warned that the big deficits facing the U.S. could also hurt the economy, as higher borrowing costs could hurt consumer and business spending.
"If government debt and deficits were actually to grow at the pace envisioned, the economic and financial effect would be severe," Bernanke added.
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