WORLD> America
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WORLD> America
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Bernanke says US economy faces big threat
(Agencies)
Updated: 2008-10-16 09:15 Few Bright Spots A Fed report prepared for the central bank's next meeting added to the gloomy news about the economy. The Beige Book said economic activity had weakened across the country in recent weeks as businesses revisited capital investment plans, consumers curtailed spending and labor markets softened. The Fed described business contacts as "pessimistic."
In his speech, Bernanke said the housing sector remained the economy's weakest spot, but he also cited "marked slowdowns" in consumer spending, business investment and the labor market. He added that credit markets would take time to unfreeze and said export sales, until recently a bright spot, were likely to slow as well. While inflation had been high recently, Bernanke said expectations of future inflation had held steady or eased, import prices were moderating and commodity prices had fallen. Those factors, along with the softness in the economy, "should lead to rates of inflation more consistent with price stability," he said. "I think the evidence is now in that the inflation problems are moderating and look to be returning to price stability at a reasonable pace." Boston Fed President Eric Rosengren was more direct. "One of the characteristics of a recession is in each of these recessions the inflation rate has come down quite dramatically," he told a real estate group in Boston. "We're in a period when the economy is likely to grow quite slowly. The events of the last couple of weeks certainly aren't going to help." |
