The United States can’t fully
recover from the worst recession in decades until hiring improves, according to
Federal Reserve Chairman Ben Bernanke.
The economy is strengthening, and
will likely grow at a faster pace this year as more confident consumers and
companies spend more, Bernanke said in prepared remarks to the National Press
But he warned that the growth won’t be strong
enough to quickly drive down high unemployment, and it could take several years
before it returns to more normal levels.
“Until we see a sustained
period of stronger job creation, we cannot consider the recovery to be truly
established,” he said.
His remarks suggest the Fed will
stick with its program to prime the economy by purchasing $600 billion of
Treasury bonds by the end of June.
Bernanke said it will take
“several years” for unemployment to return to more normal levels.
Last month, the Fed chief was more specific, saying it would take four or five
years for the unemployment rate to drop to a historically normal level of
around 5.5 per cent or 6 per cent.
The Fed chief spoke one day before
the government releases its employment snapshot for January.
Economists believe the unemployment
rate ticked up to 9.5 per cent last month, from 9.4 per cent in December, and
employers added a net total of around 146,000 jobs.
Job-creation would need to be twice
as fast each month to make a noticeable dent in unemployment.
Bernanke also urged Congress and
the White House to come up with a long-term plan to reduce the government’s $1
trillion-plus budget deficits.
Bernanke said he expected inflation
to be quite low despite a recent increase in commodities prices, such as oil
and gasoline. The Fed has said that it believes competitive pressures will
prevent companies from passing along all of these higher costs by significantly