Fed chairman makes case for steps to spur growth

Binyamin Appelbaum / New York Times News Service /


JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben Bernanke, delivered a detailed and forceful argument Friday for new steps to stimulate the economy, reinforcing earlier indications that the Fed is on the verge of action.

Calling the persistently high rate of unemployment a “grave concern,” language that several experts described as unusually strong, Bernanke made clear that a recent run of tepid rather than terrible economic data has not altered the Fed’s will to act, because the pace of growth remains too slow to reduce the number of people who lack jobs.

The federal government said Wednesday that the economy expanded at an annual rate of 1.7 percent in the second quarter, slightly higher than its initial estimate of 1.5 percent but lackluster in normal times. A measure of consumer confidence hit a three-month high Friday, but that too was impressive only in comparison to the immediate past. The government will release a preliminary estimate of August job growth next week; it is expected to show that the unemployment rate remains above 8 percent.

Bernanke said the Fed’s efforts over the last several years had helped to hasten economic recovery, that there was a clear need for additional action, and that the likely benefits of new steps to stimulate growth outweighed the potential costs.

“It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”