The news from Federal Reserve Chairman Ben Bernanke wasn’t anything the average person wasn’t already aware of. Bernanke agreed today that United States could be heading into a recession thanks to the combined issues of credit, financial crises, and the mortgage and housing crunch. However was, however, very closed lipped about what the Federal Reserve is going to do about it. His assessment of the national economy is very pessimistic when viewed in conjunction with the high rate of jobless citizens and bank foreclosures.
Bernanke stated that a recession is possible and he is under close scrutiny by both the political machine and the public to get the economy back on track. Current figures are indicating a slight growth trend, but based on everything else the economy is suffering, the growth trend will wind up being a contraction by the end of the first half of 2008. Six straight months of a shrinking economy usually constitutes a recession, but Bernanke pushed it aside with the statement, “A recession is a technical term,” and avoiding any other discussion.
The would be the first recession to hit the United States since 2001 and economists – a most of the citizens in the country – would argue with the Chairman that America is already in a recession. The home and employment crisis is a concern to Congress and the three Presidential candidates and it has forced the Federal Reserve and the government to take immediate action. Already they have slashed interest rates which have helped, but not enough.
The financial crunch is affecting everyone, from employers to Wall Street and stocks, and everything in between. It is hoped that the stimulus package of tax breaks for American citizens will help boost the economy once again by the end of the year. Bernanke believes that the fiscal and monetary changes that have been implanted will help even though he is on the hot seat about providing additional aid to relieve struggling homeowners.
Many senators have voiced their opinion on the matter and also agree that there is more the federal government can do aid the struggling nation and its citizens. Bernanke insists that Congress needs to work to bolster the housing market before people lose their homes yet he refused to give any explicit details on how. The Federal Reserve is already under fire for backing the JP Morgan takeover of Bear Stearns, stating that they were backing Wall Street and endangering billions of dollars from taxpayers.
Of course, the Fed states that was a one time deal. Bernanke feels that they will not suffer and that all of the principle and some of the interest in the deal will be recovered as the economy stabilizes. Only time will tell.