Federal Reserve Chairman Ben Bernanke advised Americans Wednesday to “continue to live your lives…and try to make smart decisions based on your own financial position” in the face of “frustratingly slow” economic growth.
Speaking at a press conference following a meeting of the Federal Open Market Committee, Bernanke acknowledged Americans’ discouragement in the economy as reflected in consumer confidence that has dropped, he said, “to where it was in the depth of the recession. That will be a drag on consumer’s willingness to spend and invest.”
He reiterated statements he made at a June press conference regarding how the Fed overestimated the pace of the recovery, but beyond “the time taken to achieve financial repair, the state of the housing market and so on,” he said, “there has been a certain amount of bad luck and I think the volatility associated with the U.S. fiscal conditions has been a drag on recovery…(and) part of the reason why the second half of 2011 was less strong than we anticipated.”
The FOMC issued a statement that it would “continue its program to extend the average maturity of its holdings of securities” and maintain “its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.”
While economic growth “strengthened somewhat” in the third quarter, the statement said, “recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.”
The Fed’s latest forecast projects that the U.S. economy will grow no more than 1.7 percent for 2011. Growth will range between 2.5 percent and 2.9 percent next year. This is a full percentage point revision lower than the Fed’s projections in June. The Fed also said that unemployment would not fall below 8.5 percent next year, a .7 percentage point higher than its June forecast.
During the press conference, Bernanke once again took a swipe at the bitter partisan political climate that he previously blamed in part for the downgrade of the U.S. credit rating. Criticism of the central bank over inflation was misplaced, he said. A more legitimate beef, he said, would be over unemployment. “It would be more helpful if we had help from other parts of the government to create jobs,” he said.
He also encouraged Americans to continue to “improve their balance sheets.” “They’re trying to pay down debt," he said. "At the same time you want to make smart decisions and good investments. You want to budget properly. Financial literacy is a big part of this.”
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.