Fed Chief’s Optimism on Economy Still Intact
Fed chief Ben Bernanke on Wednesday (Feb. 28) said his optimism about the U.S. economic outlook hasn’t been shaken by recent economic data or the stock market decline on Tuesday.
“Taking all the new data into account, there is really no material change in our expectations for the U.S. economy since I last reported to Congress a couple of weeks ago,” Bernanke said.
“We are looking for moderate growth in the U.S. economy going forward,” Bernanke said.
CBS MarketWatch reported that Bernanke was referring to his recent report on the economy delivered to Congress on Feb. 14 and 15. At the time, Bernanke gave an upbeat assessment for growth and inflation.
U.S. stocks rallied in choppy trading, and some traders said Bernanke’s soothing words were a factor.
Bernanke even held out the chance that the economy might strengthen as the year progresses.
“We believe that if the housing sector begins to stabilize and if some of the inventory corrections that are still going on in manufacturing begin to be completed, that there is a reasonable possibility that we will see some strengthening of the economy some time during the middle of the year,” he said.
Bernanke specifically said he was not troubled by the sharp downward revision to fourth quarter gross domestic product. Earlier Wednesday, the Commerce Department cut the growth rate in the final quarter to 2.2% from the initial estimate of a 3.5% growth rate.
“The downward revision…is actually more consistent with our overall view of the economy than were the original numbers,” Bernanke said.
Bernanke said the market functioned well during the steep decline on Tuesday but said the central bank was watching activity carefully.