WASHINGTON, Aug. 2 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke said Monday that demand from households and businesses will succeed policy stimulus to serve as a leading driver of economic recovery.
"After a precipitous decline in late 2008 and early 2009, the U. S. economy stabilized in the middle of last year and is now expanding at a moderate pace," Bernanke said in a speech to southern U.S. state lawmakers in Charleston, South Carolina.
"But we have a considerable way to go to achieve a full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure, and lost savings," he added.
U.S. economy grew at a 2.4 percent annual rate in the second quarter of this year, a deceleration from an increase of 3.7 percent in the first quarter of 2010 and 5.0 percent in the last three months of 2009, according to the preliminary estimate by the Commerce Department.
"While the support to economic activity from stimulative fiscal policies and firms' restocking of their inventories will diminish over time, rising demand from households and businesses should help sustain growth," said the chairman.
Consumer spending, which accounts for about 70 percent of the overall economy, remains sluggish. Personal consumption expenditures rose 1.6 percent in the second quarter, compared with an increase of 1.9 percent in the first.
But Bernanke expected growth in consumer spending to pick up in coming quarters from its recent modest pace, supported by gains in income and improving credit conditions.
Business investment will continue to prop up the fragile economic recovery, he added. "In the business sector, investment in equipment and software has been increasing rapidly, in part as a result of the deferral of capital outlays during the downturn and the need of many businesses to replace aging equipment," he said.
Still, Bernanke noted that "notable restraints on the recovery persist," including housing, commercial real estate and the labor market.