Ben Bernanke offered a hopeful forecast for the U.S. economy Friday, saying "prospects for a return to growth in the near term appear good." Economists weigh in on the outlook.
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The chairman of the Federal Reserve had hopeful words on the U.S. economy today. Ben Bernanke said the country was starting to emerge from recession and aggressive intervention by the government was working.
Jeffrey Brown has our lead story report.
The Fed chairman gave his optimistic assessment at an annual Federal Reserve symposium held in the high mountain country of Jackson Hole, Wyoming.
Mr. Bernanke said, in part, “After contracting sharply over the past year, economic activity appears to be leveling out both in the United States and abroad, and the prospects for a return to growth in the near term appear good.”
He did temper that enthusiasm with a note of caution, saying problems persist in both the credit and job markets.
But stock markets jumped on Bernanke’s remarks. The Dow gained nearly 156 points to 9,506. The Nasdaq was up 31, ending the day just under 2,021. For the week, the Dow was up 2 percent; the Nasdaq, 1.8 percent.
Data from the housing market provided an added boost. The National Association of Realtors said sales of existing homes were up for the fourth consecutive month. July sales were up 7.2 percent from June, the largest monthly gain in a decade.
Low prices and interest rates and generous federal tax credits contributed to the gains. Median home prices continued to drop, as sellers flooded markets glutted in part with foreclosed homes.
At the White House, spokesman Robert Gibbs noted the positive housing news, but said there’s still much work to do.
ROBERT GIBBS, White House press secretary:
It does appear that the housing market is bottoming out a bit, which obviously was one of the reasons we got into the severity of the economic downturn that we’re in now. The president is pleased with the fact that it appears we’re making some progress in stabilizing that economy, as I’ve talked about, but won’t be satisfied until we get the economy fully back on track and that we’re growing the economy in a way that creates jobs for the millions of Americans who continue to look for work and thus far can’t find it.
Indeed, the weekly jobless numbers released yesterday showed an unexpected rise in new claims for unemployment assistance. Figures out today show that 26 states saw their jobless rates climb last month.
But 17 states and the District of Columbia reported better-than-expected unemployment figures for July, due in part to seasonal hiring and the effects of the federal stimulus.
There was one more piece of economic news released just a short time ago. The Associated Press reported that the White House is now estimating the federal budget deficit will be $2 trillion higher than previously anticipated over the coming decade.
We take a look at all this now with two economists, Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., and Philip Jefferson of Swarthmore College. He served as an economist to the Fed’s Board of Governors.