Bernanke upbeat despite housing, inflation
The Fed chairman today predicted that the economy will bounce back after a weak first quarter.
Fed chairman Ben Bernanke today predicted that the economy will bounce back after a weak first quarter, despite housing and inflation concerns.
Growth during the first quarter of this year was held down by significant declines in inventory accumulation, net exports, and federal defense spending, Mr. Bernanke said in prepared remarks delivered via satellite to the International Monetary Conference in Cape Town, South Africa.
“[The factors] that seem likely to be at least partially reversed in the near term,” he said.
His remarks follow last week’s announcement that the gross domestic product increased an anemic 0.6% in the first quarter, marking the smallest increase in more than four years.
While Mr. Bernanke has a positive economic outlook going forward, he said that the slowdown in residential construction looks like it will remain a “drag on economic growth for somewhat longer than previously expected.”
On the topic of inflation, Mr. Bernanke said that core inflation, which excludes food and energy prices, still remains “somewhat elevated” despite some improvements.
“Although core inflation seems likely to moderate gradually over time, the risks to this forecast remain to the upside,” he said.
Learn more about reprints and licensing for this article.
