Just after the latest US jobs figures were released on Friday, Federal Reserve Chairman Ben Bernanke was cautiously upbeat as he addressed the Senate Budget Committee.
He said the central bank sees “increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold.”
But he admitted a rebound in employment remains elusive: “Considerable time likely will be required before the unemployment rate has returned to a more normal level. Persistently high unemployment by damping household income and confidence could threaten the strength and sustainability of the recovery.”
With unemployment likely to remain above eight percent for the next two years, Bernanke said the Fed’s stimulus measures – buying government bonds – need to continue.
He also warned the politicians of severe long term consequences for the economy unless they get the US budget deficit under control.