Federal Reserve Chairman Ben Bernanke has been back in the usual hotseat before Congressional lawmakers itching to garner some T.V. coverage in an election year. And though news is mostly positive about the U.S. economy, the Fed appears ready to continue on its path, no matter how popular or unpopular it may be with members of the U.S. House and Senate.
Bernanke presented the semi-annual Economic Outlook and the Federal Budget Situation over two days on Capitol Hill, with his most recent appearance coming Tuesday. The report indicated the economy continued to growth, albeit at not an exceedingly robust pace, on strength in sectors such as manufacturing. Additionally, the gains were more than offsetting ongoing construction/real estate woes and concerns from economic problems abroad, primarily in the European Union. Of keen interest to U.S. businesses is predictions of spending on capital improvements and hope for continued improvement in credit conditions.
“More recently, the pace of growth in business investment has slowed, likely reflecting concerns about both the domestic outlook and developments in Europe -- However, there are signs that these concerns are abating somewhat,” Bernanke said. “If business confidence continues to improve, U.S. firms should be well positioned to increase both capital spending and hiring...and surveys indicate that credit conditions have begun to improve modestly for those firms as well.”
Another key topic of conversation was the positive January unemployment numbers that shocked market-watchers by falling to 8.3%. Still, the chairman reaffirmed the Fed would keep the target for the federal funds rate near zero. He also warned that unemployment numbers for one month do not paint a complete, reliable picture about a U.S. labor market that still faces some problems or the fact that unemployment numbers do track the many who have simply given up looking for a job as certain industry sectors and regions have seen an anemic rebound to date.
Brian Shappell, NACM staff writer