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US Federal Reserve Chairman Ben Bernanke says that the Fed is ready to take further steps if needed to spur economic growth.
Bernanke admits the economic recovery is less vigorous than what the Fed had expected, but he believes the economy will pick up next year.
Federal Reserve Chairman Ben Bernanke, attending the Fed's annual retreat in Jackson Hole, Wyoming, pledged to take unconventional measures to spur the economy, if needed.
In a written speech Friday, Bernanke said the economic recovery has weakened more than expected and the Fed has the tools to support growth and fend-off deflation.
Michael Gapen, senior U.S. economist, Barclays Capital, said, "They are looking at unconventional monetary policy as purchases of Treasury securities which would keep mortgage interest rates low and enable households to engage in further balance sheet repair."
Bernanke's comments follow the latest economic release, which shows growth in the U.S. slowed more sharply than expected in the second quarter, as imports surged to the highest level in 26 years. The economy grew at a 1.6% annual rate, below original estimates, and well off the 3.7% from the first quarter.
Allen Sinai, Chief Global Economist, of Decision Economics: "Technically a double dip means you go back to a bona fide recession which would mean at least two quarters of negative real GDP growth and then a whole bunch of monthly indicators that would show up negative, that doesn't look like it's in the cards but one chance in five of the true technically speaking double dip."
The economy, trying to recover from the worst economic downturn since the Great Depression, has largely been fueled by the government's 862 billion dollar stimulus package. But that may not be enough to keep the recovery going.
Michael Gapen, senior U.S. economist, Barclays Capital, said, "Once we move into the fourth quarter and beyond it's really about jobs, it's really about improvement in the labor markets and it's really about household consumption."
That may take some time, the Reuters University of Michigan consumer sentiment survey shows job and housing market worries weighed on consumers in late August.
And, Bernanke warns a turnaround in the job market may be some time to come.