US Federal Reserve Chairman Ben S Bernanke told the US Senate on Wednesday that the country's economy was continuing to expand moderately, thanks to stimulative monetary and fiscal policies, but jobs and the housing market remained worrisome, dpa reported.
Testifying before the US Senate Committee on Banking, Housing and Urban Affairs in his semi-annual assessment of the US economic situation, Bernanke noted a "slow recovery" in the job market, in turn impacting on a "weak" housing market.
Bernanke said the current outlook was "qualitatively similar" to previous forecasts in February and May made by the policy-making Open Market Committee, with real GDP growth expected at 3.0 to 3.5 per cent this year.
This would be followed by 3.5 to 4.5 per cent growth next year and 2012, he said, according to the text of prepared remarks which Bernanke read to the committee.
Bernanke said real consumer spending grew at an annual 2.5 per cent rate in the first half of 2010, characterized by rapid expansion on purchases of durable goods.
"However, the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction," he told the committee.
Bernanke said that private payrolls had expanded by about 100,000 per month in the first half of the year.
But he cautioned that this was "a pace insufficient to reduce the unemployment rate materially" and progress in cutting joblessness "is now expected to be somewhat slower than we previously projected."
Underscoring the slower pace of job recovery, Bernanke said: "In all likelihood, a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009."
Turning to other sectors of the economy, Bernanke said inflation was expected to remain "subdued" with an average rate of just 1 per cent this year and remaining "low during 2011 and 2012."
Bernanke's testimony before the Senate's Banking Committee was hotly anticipated amid a debate between US lawmakers over how to revive a still-sagging economy. President Barack Obama's approval ratings have remained low with a jobless rate stuck at 9.5 per cent.
Democratic lawmakers have been pushing to inject more public funds into the economy, beyond a 787-billion-dollar fiscal stimulus approved last year, while conservatives have urged more attention to the soaring fiscal deficit.
The Federal Reserve, too, has been divided over how quickly to relax monetary policy measures that have been designed to stimulate the economy. Some central bank members have wavered on decisions to keep interest rates at a record low of near 0 per cent.