It’s up to Congress now: Bernanke

U.S. Federal Reserve chairman Ben Bernanke has proposed no new steps to boost the American economy, suggesting Congress may need to act to stimulate hiring and growth.

Speaking at an annual economic conference in Jackson Hole, Wyoming, Bernanke said that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run.

“To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time,” he said. “Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery.

“Acting now to put in place a credible plan for reducing future deficits over the longer term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives.”

His speech follows news that the economy grew at an annual rate of just 1% this spring and 0.7% for the first six months of the year. Only slightly healthier expansion is expected for the second half.

“It is clear that the recovery from the crisis has been much less robust than we had hoped,” he said. “Unfortunately, the recession, besides being extraordinarily severe as well as global in scope, was also unusual in being associated with both a very deep slump in the housing market and a historic financial crisis. These two features…have acted to slow the natural recovery process.”

Bernanke says he’s optimistic that the job market and the economy will return to full health in the long run.

He said the Fed still has “a range of tools” at its disposal, which were discussed in its August meeting. These will be revisited when the Federal Open Market Committee meets in September.