The head of the US central bank, Ben Bernanke has said another wave of government spending may be needed to boost the struggling US economy.
The Federal Reserve Chairman told the House of Representatives Budget Committee that lawmakers should think about consider a second stimulus plan to counter longer term weakness.
He added: “If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers. Such actions might be particularly effective at promoting economic growth and job creation.”
The Bush Administration has been cool on the idea of more government spending to stimulate the economy, but a White House spokesman said it will look at what the Democrat controlled Congress suggests.
This is Bernanke’s first endorsement of such a plan. He said: “Because the time that will be needed for financial normalisation and the effects of ongoing credit problems in the broader economy are difficult to judge, the uncertainty currently surrounding the economic outlook is unusually large.”
Democrats in Congress want tens of billions of dollars spend on domestic construction projects to repair aging roads, bridges and other infrastructure as well as create jobs and local investment.