Bernanke predicts job market will be slow to recover

WASHINGTON — Federal Reserve Chairman Ben Bernanke, saying the economic outlook was "unusually uncertain," predicted Wednesday that unemployment was likely to remain stubbornly high for several years, straining families and endangering the nation's economic stability and competitiveness.
"Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers' employment and earnings prospects," he said.

"This is the worst labor market, the worst episode, since the Great Depression," Bernanke said of long-term unemployment.

"Not only for the sake of the unemployed and for the short-term strength of the economy but also for a long-term viability in international competitiveness," he added, "I think we need to be very seriously concerned."

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While Bernanke, in his semiannual testimony to Congress, painted a bleak picture for the millions of jobless workers, he said the U.S. economy was continuing to recover at a moderate pace. And for now, he said, the central bank was holding off on taking further actions to stimulate the economy.

A series of economic data in recent weeks have pointed to slowing economic growth, fanning fears of a return to recession and prompting speculation that the central bank may be gearing up to buy more securities or initiate other moves in an effort to spur lending by pushing already-low long-term interest rates even lower.

"Are you out of bullets?" asked Sen. Jim Bunning, R-Ky., a member of the Senate Banking Committee and critic of the Fed.

"Well, I don't think so," Bernanke replied, adding however that "we're not prepared to take any specific steps in the near term particularly since we're still also evaluating the recovery and the strength of the recovery."

Bernanke recited the Fed's most recent economic forecast, made in late June, which calls for 3 percent to 3.5 percent economic growth in 2010. That is a slowdown from the 4 percent growth in the second half of 2009, when the economy emerged from the deep recession.

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