Bernanke: 'Bad Luck' Contributed to Subpar Recovery

Thursday, 19 Dec 2013 08:00 AM

 

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Federal Reserve Chairman Ben Bernanke says the U.S. economy's slow recovery from the Great Recession has been subpar for several reasons, including the extensive damage from the housing bust and tight budgets at all levels of government.

But he also blamed the anemic pace of the recovery on "some bad luck," saying Europe's debt troubles slowed the global economy at a critical time.

"Given all the things we have faced, it is not shocking that the recovery has been tepid," he said during a news conference after the Fed's two-day policy meeting.

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He said the United States has still done better than many other countries.

Bernanke made the comments after the Fed announced it would begin to reduce its bond purchases by $10 billion in January, signaling a stronger economy.

Bernanke says the Federal Reserve's decision Wednesday to slow its bond purchases is a sign of progress and he expects the Fed to take "similar moderate steps" throughout next year to reduce the purchases further if the economy shows continued improvement.

Still, Bernanke cautioned that the Fed's further reductions in the purchases remain dependent on data.

"When we are disappointed with the outcomes, we could skip a meeting or two; if things pick up, we could go faster," he said.

He noted that the economic recovery still remains far from complete and long-term unemployment remains a concern, he said.

Meanwhile, Bernanke says his expected successor, Janet Yellen, "fully supports" the Fed's decision to slow its bond purchases.

Bernanke said that he has made a practice of consulting with Yellen and that she was "consulted closely" before the Fed voted to reduce its bond purchases.

Yellen's nomination as the next Fed chairman is expected to be confirmed soon by the Senate. Bernanke's term as chairman ends on Jan. 31.

Responding to a question, Bernanke said that his impending departure played no role in the decision to vote on reducing the bond purchases at the December meeting.

Finally, Bernanke says he intends to stay in Washington for the "immediate future" after he steps down as chairman of the Federal Reserve next month.

But he was otherwise vague on his future plans when asked about them at his final quarterly news conference as chairman.

Responding to a question about his retirement plans, Bernanke said he has decided to stay in Washington rather than return to his hometown of Dillon, S.C., where he has an uncle.

"He is 85 and very chipper," Bernanke said but he indicated that he now has more relatives living in North Carolina than South Carolina.

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