Bernanke says US economic outlook uncertain

Ben S. Bernanke

In congressional testimony, the Fed chairman predicts that unemployment will remain stubbornly high for years. His comments send stocks down sharply.

Federal Reserve Chairman Ben S. Bernanke painted a generally downbeat picture of the U.S. economy Wednesday, saying the overall outlook is “unusually uncertain” and predicting that unemployment will remain stubbornly high for several years.

Slowly improving consumer and business spending will help the economy grow 3% to 3.5% this year and 3.5% to 4.5% in each of the next two years, Bernanke told members of the Senate Banking Committee in his semiannual testimony to Congress.

But it will take “a significant amount of time” to reclaim the 8.5 million jobs lost during the recession, he said. The national unemployment rate, currently 9.5%, is expected to decline only to 7% to 7.5% by the end of 2012, Bernanke said.

“Nearly half of the unemployed have been out of work for longer than six months,” Bernanke said. “Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers’ employment and earnings prospects.”

Bernanke’s statements sent the markets down sharply. The Dow Jones industrial average of 30 blue-chip stocks had been flat but fell more than 125 points midway through his testimony.

The tone of Bernanke’s comments matches that of many private forecasters, who have grown less sanguine with the economic outlook in the last few months. Though most experts believe the economic recovery will continue, the consensus is that it will be slower and more grinding than once envisioned.

Other drags on the economy, Bernanke said, include the “weak” housing market and a “somewhat weaker outlook” for financial conditions, including the high debt levels and troubled economic situation in Greece and several other European countries.

Though the financial services industry has recovered significantly from the financial crisis, “many banks continue to have a large volume of troubled loans on their books, and bank lending standards remain tight,” he said.

Source: LA Times

The social networking site snagged its 500 millionth user this morning, according to Facebook Inc. CEO Mark Zuckerberg, who announced the news in a blog post. The Web 2.0 phenom had been waiting expectantly to hit the milestone and is commemorating the achievement by showcasing a series of user stories about how Facebook has affected people’s lives.

Zuckerberg also is marking the occasion by doing an interview on “ABC World News with Diane Sawyer” Wednesday evening. According to ABC News, the telecast will include Zuckerberg giving Sawyer a tour of Facebook’s offices, along with a sit-down interview.

“As of this morning, 500 million people all around the world are actively using Facebook to stay connected with their friends and the people around them,” Zuckerberg wrote in his blog. “This is an important milestone for all of you who have helped spread Facebook around the world. Now a lot more people have the opportunity to stay connected with the people they care about.”

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