WASHINGTON (AP) ? Federal Reserve Chairman Ben Bernanke said he’s surprised by how cautious consumers have been in the two years since the recession officially ended. But the Fed chief offered no hints of any steps the Fed would take to boost the weak economy.
Bernanke said Thursday that a number of factors are keeping consumers from spending more, including high unemployment, a temporary spike in energy prices, falling home prices and high debt burdens.
“Even taking into account the many financial pressures they face, households seem exceptionally cautious,” Bernanke said, according to a transcript of a speech his is giving in Minneapolis.
Bernanke acknowledged that prices for gas, cars and other consumer goods have risen sharply this year. But he said the increases were partly because of temporary factors, such as supply chain disruptions stemming from the Japan crisis. He said he expects inflation will moderate in the coming months as those factors ease.
The Fed will consider range of policy options at its next meeting later this month. Bernanke said. But he offered no clues as to what it might do. His comments were familiar to ones he made last month during a speech in Jackson Hole, Wyo.
Some economists say the Fed must take further action to help the economy avoid another recession.
The economy barely grew in the first half of the year, and the government said last week that employers stopped adding jobs in August.
Consumers and businesses are feeling less confident after a rocky summer. Lawmakers fought over raising the federal borrowing limit, Standard & Poor’s downgraded long-term U.S. debt, and stocks have fluctuated wildly after plunging in late-July and early August.
On Aug. 9, the Federal Reserve said it planned to keep interest rates very low until at least mid-2013, assuming the economy remained weak. Minutes from that meeting showed some Fed officials had pushed for more aggressive steps.
One possibility is for the Fed to increase the percentage of long-term Treasury securities in the central bank’s mix of holdings. That approach would have the advantage of exerting downward pressure on long-term interest rates without adding to the Fed’s already record-level of securities holdings.
Still, three regional bank presidents dissented from the Aug. 9 decision. They had expressed concerns that the Fed’s policies were contributing to higher inflation.
The worsening jobs outlook has also put pressure on President Barack Obama. He is expected on Thursday to introduce a $300 billion jobs package before a joint session of Congress. The plan will likely include extensions of the payroll tax cut and long-term unemployment benefits, tax incentives for businesses that hire and money for public works projects.
But the effort faces strong opposition from congressional Republicans, who say that Obama’s previous stimulus program was a failure. They want deeper spending cuts to fight the government’s soaring budget deficits.