Ben Bernanke sounded a dour note in his testimony before Congress today, predicting slow growth and stubbornly high unemployment, with no hint that the Fed intended to do anything about it. "The US economy has continued to recover, but economic activity appears to have decelerated somewhat," he said, according to the Wall Street Journal. "The reduction in the unemployment rate seems likely to be frustratingly slow." Indeed, the Fed's current projections have the rate at 7% at the end of 2014.
Bernanke also warned Congress not to go over the so-called "fiscal cliff," by allowing automatic tax hikes and spending cuts to kick in next year, predicting that the result would be a "shallow recession" and "1.25 million fewer jobs" being created. Then the questioning began. Some highlights:
- A few senators tried to prod Bernanke on the possibility of another round of quantitative easing, but he didn't bite, saying only that the Fed will "have to consider additional steps" if things don't improve.
- Asked if the Libor rate was reliable, he replied, "I can't give that assurance with full confidence" because the Fed's reform recommendations weren't all implemented.
- Chuck Schumer told the Fed chief that given partisan gridlock, it was unlikely Congress would act to solve the country's fiscal problems, leaving the Fed as the economy's only hope. "Get to work," he urged.
- Republican Bob Corker, meanwhile, tried to prod Bernanke into telling Congress not to rely on him. Bernanke replied that it wasn't his job "to hold threats over Congress' head."