TEXT OF STORY
TESS VIGELAND: Fed chairman Ben Bernanke told lawmakers on Capitol Hill this morning that he supports an immediate but short-term plan to get cash into the hands of consumers, but he also characterized the economy as still “resilient.” Question is does anybody believe him?
Marketplace’s Nancy Marshall Genzer takes a look.
NANCY MARSHALL GENZER: Bernanke wasn’t exactly cheerful when he testified today before the House Budget Committee. He said the “downside risks” to economic growth this year have “become more pronounced,” but Bernanke insisted the Fed was not forecasting a recession.
BEN BERNANKE: Well we currently see the economy as continuing to grow, but growing at a relatively slow pace, particularly in the first half of this year.
Ohio Democrat Marcy Kaptur, a member of the committee, found Bernanke unconvincing. She says she knows he didn’t want to spook Wall Street by using the “r word,” but she wishes he would have acknowledged the pain her district feels from unemployment and the sub-prime mess.
MARCY KAPTUR: I think his comments were more for the New York markets, and they actually don’t reflect the reality of what the American people have been experiencing. A majority of the American people believe we’re in recession.
Investors appear to agree. Stocks took a dive as Bernanke started speaking. Economist Bernie Baumohl of the Economic Outlook Group says there’s a better than 50 percent chance of a recession, but that’s in the first quarter of this year. He says Bernanke’s testimony today was right on the mark.
BERNARD BAUMOHL: It’s a very clever answer because you can still have one or two quarters of recession, and for the year as a whole still have growth. He just didn’t want to use the “r word.”
There was one “r word” Wall Street did want to hear, “rate,” as in interest rate cuts. Bernanke pledged the Fed would lower a key interest rate when it meets later this month.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.