ABC News’ Matthew Jaffe reports:
In delivering the Federal Reserve’s semi-annual monetary policy report to Congress, central bank chairman Ben Bernanke today said the nation’s economic recovery will likely speed up this year compared with last, but a “relatively weak” job market and an “exceptionally weak” housing sector remain problematic.
“Following the stabilization of economic activity in mid-2009, the U.S. economy is now in its seventh quarter of growth; last quarter, for the first time in this expansion, our nation's real gross domestic product matched its pre-crisis peak. Nevertheless, job growth remains relatively weak and the unemployment rate is still high,” Bernanke told a Senate Banking Committee hearing this morning.
“If the rate of economic growth remains moderate, as projected, it could be several years before the unemployment rate has returned to a more normal level,” he added later.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he cautioned. “Likewise, the housing sector remains exceptionally weak.”
In addition, the Fed boss also warned lawmakers that rising oil prices could pose a threat to economic growth, but the most likely outcome is a “temporary and relatively modest increase in U.S. consumer price inflation.”
“Although overall inflation is low, since summer we have seen significant increases in some highly visible prices, including those of gasoline and other commodities,” Bernanke observed. “Notably, in the past few weeks, concerns about unrest in the Middle East and North Africa and the possible effects on global oil supplies have led oil and gasoline prices to rise further.”
“The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation – an outlook consistent with the projections of both FOMC participants and more private forecasters. That said, sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored.”