Bernanke
did offer a positive outlook for the housing market, however: He acknowledged
the housing market is showing signs of improving, but he said that it it is
contributing less to economic growth than it has in past recoveries.
Bernanke
announced no new action by the central bank to try to stimulate the sluggish
economy, although some analysts predict that before the end of the year the Fed
will act to buy up more Treasury bonds, which could lower long-term interest
rates even further from record lows.
In
testimony to the Senate Banking Committee on Tuesday, Bernanke pushed lawmakers
to reach a compromise on tax increases and spending cuts that are to take effect
by the end of the year. He said that if lawmakers don’t approve the tax
increases and spending cuts by then, it’s likely a “shallow recession would
occur early next year.”
"The
most effective way that the Congress could help to support the economy right now
would be to work to address the nation's fiscal challenges in a way that takes
into account both the need for long-run stability and the fragility of the
recovery," Bernanke told the Senate Banking Committee. "Doing so earlier rather
than later would help reduce uncertainty and boost household and business
confidence."
Source: “Bernanke Offers Downbeat View of Economy,
but no Action,” USA Today (July 17, 2012)