WASHINGTON (Feb. 29, 2012) — Economic and employment growth in the U.S. are likely to remain slow at least through 2012, Federal Reserve Chairman Ben Bernanke said in his Semiannual Monetary Policy Report to the Congress.
The Federal Reserve Board and the presidents of the Federal Reserve Banks recently projected that growth in real Gross Domestic Product will be in the neighborhood of 2.2 to 2.7 percent this year, Mr. Bernanke said before a Feb. 29 hearing of the House Financial Services Committee.
“These forecasts were considerably lower than the projections they made last June,” Mr. Bernanke said.
Several factors caused them to revise their forecasts downward, he said. These included revisions to national income and product accounts indicating that the recovery was slower than expected; continuing fiscal and financial strains in Europe; and continuing problems in U.S. housing and mortgage markets.
Similarly, recent good news in jobs and unemployment rates don't mean the employment situation is anywhere near normal, Mr. Bernanke warned.
“The unemployment rate remains elevated, long-term unemployment is still near record levels, and the number of persons working part time for economic reasons is very high,” he said.
The Fed board does not anticipate further substantial declines in the unemployment rate in 2012, and the rate will merely continue to edge down after year's end, Mr. Bernanke said.