In 'Dour' Report, Fed's Bernanke Says Economy Has Decelerated
"The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year," Federal Reserve Chairman Ben Bernanke tells Congress this morning in testimony prepared for his semiannual report on economic conditions and monetary policy.
Bernanke is speaking to the Senate Banking, Housing & Urban Affairs Committee, which is webcasting the hearing here.
The central bank chief goes on in his statement to say that Fed policymakers predict "economic growth will likely continue at a moderate pace over coming quarters and then pick up very gradually. ... Our projections for growth in real GDP ... had a central tendency of 1.9 to 2.4 percent for this year and 2.2 to 2.8 percent for 2013. These forecasts are lower than those we made in January, reflecting the generally disappointing tone of the recent incoming data."
The risks to the economy's continued growth, he adds, continue to be "the euro-area fiscal and banking crisis ... [and] the U.S. fiscal situation." And, says Bernanke:
"The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery. Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence."
The Wall Street Journal, which is live blogging the hearing, says that:
-- "Bernanke provided no new direct clues as to whether the central bank would take fresh steps to support the fragile economic recovery."
-- "It's hardly shocking, but Bernanke's testimony changes little from his prior guidance about Fed policy. But he's especially dour."
Looking for brighter news on the economy?
"Builder confidence in the market for newly built, single-family homes rose six points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, released today. This is the largest one-month gain recorded by the index in nearly a decade, and brings the HMI to its highest point since March of 2007."
Update at 2:10 p.m. ET. Stocks Are Up, Led By Those That Do Well In Tough Times:
Reuters writes that "stocks rose in volatile trade on Tuesday, led largely by sectors that perform well in a struggling economy, as comments from Federal Reserve Chairman Ben Bernanke underscored that growth remains weak."