Ben Bernanke’s speaking2 April, 2008, 13:58. Posted by Zarathustra
Tags: Economy, Federal Reserve, Great Depression, IMF, Markets, US
The Chairman seems to become more pessimistic about the US economy than before. He is now speaking in the testimony in Congress. He also defended the bail-out for Bear Stearns.
Federal Reserve Chairman Ben S. Bernanke acknowledged for the first time that the economy may contract as homebuilding weakens further, unemployment rises and consumer spending slumps.
"It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said in testimony to Congress’s Joint Economic Committee today. He also told lawmakers the Fed’s agreement to provide an emergency loan to Bear Stearns Cos. followed a March 13 warning by the company that it "would have to file for Chapter 11 bankruptcy the next day.”
It was interesting that economists and analysts in banks have been talking about recession for months, at the time that the Fed did not think so. Today, the Chairman speaks about the economy in pessimistic tone, and the IMF says it is the worst crisis since the Great Depression, while there starts to be some optimisms around the market these days.
Perhaps she’s right: Liz Ann Sonders, Chief Investment Strategist of Charles Schwab, spoke on Bloomberg TV about the forward-looking nature of the financial markets. The downturn in the market was 6 months ahead of the recession, and the rebound will be well earlier when we see growth momentum in the economy.