Bernanke tentative on growth, consumer confidence
Federal Reserve chairman Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee on July 17, 2012 in Washington, DC.
Jeff Horwich: This hour Federal Reserve Chairman Ben Bernanke took his regular seat before the Senate Banking Committee. As always, his words are getting careful scrutiny.
Our D.C. bureau chief, John Dimsdale, is keeping a close eye on things for us. Hello, John.
John Dimsdale: Hello, Jeff.
Horwich: So what does Bernanke have to say? What is the state of our economy?
Dimsdale: Well, he thinks it is losing momentum and he's worried about the effects of the euro's problems on the global economy, including the U.S., and he's also raising warnings about the uncertainty caused by the fiscal cliff -- that's when taxes go up and government spending would be slashed unless there's some sort of political agreement by the end of the year. He said that the signs of a slowing economy are causing consumers to close up their pocketbooks.
Ben Bernanke: Although declines in energy prices are now providing some support to consumer's purchasing power, households remain concerned about their employment and income prospects and their overall level of confidence remains relatively low.
Horwich: Well, that sounds kind of dim, has he done anything to cheer us up?
Dimsdale: Well, he said there are modest improvements in housing. Below mortgage interest rates have stimulated more sales. There are signs that home prices have finally hit bottom and are turning up at least in most places, and that sparked an increase in home construction which should create some jobs. But even with these improvements, the Fed has lowered its projections for overall economic growth this year to below 2 percent, which isn't big enough to bring down unemployment.
Horwich: And now for the usual game we always play, is he offering up any clues to what the Fed might do?
Dimsdale: Well, he said as always that he stands ready to do whatever it takes. He says one big factor is whether there will be improvements in unemployment. The Fed meets next in a couple of weeks, and if they are going to act, I think it is going to be sooner rather than later because they don't want to get involved in the presidential election campaign.
Horwich: John Dimsdale with me live from Washington, D.C. Thank you, John.
Dimsdale: You're welcome.