U.S. Federal Reserve Chairman Ben Bernanke said on Monday that the economy is slowly improving although it has yet to recover fully since unemployment is high and the housing market remains weak. “We have a considerable way to go to achieve full recovery in our economy, and many Americans are still grappling with unemployment, foreclosures and lost savings,” Bernanke said in a speech to South Carolina state legislators. He said that U.S. interest rates must remain at historic lows near zero percent until the economic recovery is sustainable and job creation increases. His remarks come as manufacturing expansion was at its slowest pace in a year. A July employment report is expected to show a second month of net job losses. In his speech, Bernanke focused heavily on the problems faced by budget-strained state and municipal governments. He said constraints at the local level were also in the way of national recovery. Bernanke said consumer spending should help sustain the recovery since it is expected to increase in the coming quarters, as income rises and credit conditions improve. The U.S. economy grew for four straight quarters, but recovery slowed to a 2.4 percent annual pace during the second quarter. The Federal Reserve may take further action to strengthen the economy to counter the slow down. In response to the financial crisis, the Federal Reserve decreased interest rates too close to zero and purchased government and mortgage bonds to help credit markers.
