Friday, April 29, 2011

Bernanke says US economy needs more time to heal

The US economy is not fully recovered from its deep recession, with housing still weighing on growth, Federal Reserve Chairman Ben Bernanke said in a speech spelling out ways the US central bank has studied lower income communities.

"Our economy is far from where we would like it to be," he said in prepared remarks to a conference.

The Fed earlier this week said it will see its $600 billion bond buying program, launched in November to spur a weak recovery, through to its planned conclusion at the end of June.

The world's largest economy grew at a sluggish 1.8 percent annual rate in the first three months of the year, but unemployment is still at a lofty 8.8 percent.

"Obviously, the problems in the labor market and the housing market are not unrelated," he said.

The Fed chairman said Fed research shows loans to individuals and businesses through community development financial institutions can boost economic activity. That business generates tax revenues that in turn permits government spending in ways that benefit these communities, he said.

"We at the Federal Reserve will remain closely attuned to the economic health of all communities, including low- and moderate-income communities," Bernanke said.

Bernanke said the economy is recovering at a moderate pace, and that there has been "welcome, if gradual" improvement in labor markets.