WASHINGTON: Federal Reserve Chairman Ben Bernanke said on Tuesday that the worst US recession since the Great Depression was probably over, but the recovery would be slow and it would take time to create new jobs.
“Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” Bernanke said after giving a speech at a Brookings Institution conference.
In declaring the recession over, Bernanke went slightly beyond the Fed’s most recent assessment that the economy was leveling off and that indications on growth had improved.
However, he cautioned that growth next year would probably be not much faster than the economy’s so-called long-run potential rate, which meant it would be slow to absorb excess capacity and pare the unemployment rate.
Meanwhile, Treasury Secretary Timothy Geithner acknowledged on Tuesday the federal government had to take some “deeply offensive” steps to help the US get past the financial crisis a year ago. But he also said in a TV interview that things are “dramatically different” now, although it’s too early to say the economy is in recovery. “A year ago we really were on the verge of a full-scale run” on banks, along the lines of the 1930s Depression, Geithner said in an interview broadcast on ABC television. He said “the biggest fear now, the biggest challenge, is to make sure we change the rules of the game so it doesn’t happen again.”
Asked about projections of a $1.6 trillion deficit and a growing US debt obligation to other countries, Geithner said the Obama administration still wants to avoid an increase in income taxes on the middle class. The secretary noted Barack Obama’s pledge against such a hike during his presidential campaign and said Obama remains “very committed” to it.
