Bernanke's Thoughts on Economic Outlook, Federal Budget

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Bernanke's Thoughts on Economic Outlook, Federal Budget

In his testimony on the economic outlook and federal budget, Ben Berkanke said that "indicators of spending, production, and job market activity have shown some signs of improvement." He also said, however, that economic outlook remains uncertain, and that economic developments will need to be closely monitored.

Bernanke said that while the pace of growth in business investment has slowed, there are signs that concerns over the domestic outlook and developments in Europe are “abating somewhat.” He also said that global economic activity is slowing, partly due to “spillovers from fiscal and financial developments in Europe.”

Regarding fiscal policy, the Fed Chairman said, “To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. Attaining this goal should be a top priority.”

Bernanke noted that fiscal sustainability and economic recovery can co-exist, as a more robust recovery will lead to reduced deficits and debt. He also said that sustainable fiscal policy could keep interest rates low and improve confidence.

 

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