Washington - AFP
After a slew of wretched economic news, Federal Reserve Chairman Ben Bernanke has warned there had been a \"loss of momentum\" in the already tepid US jobs market. Two years into a slow and largely jobless recovery, Bernanke predicted employment and growth would eventually pick up, but that a recent soft-patch needed to be carefully monitored and that stimulative policies were still needed. \"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,\" Bernanke told an audience in Atlanta, Georgia. Reiterating a now all-too-familiar story of a recovery hobbled by a lack of new employment opportunities and a continued housing crisis, he told the audience that \"the jobs situation remains far from normal.\" Just 1.8 million of the nine million jobs lost in the recession have been recovered, according to official figures, dampening everything from consumer spending to business investment. On the back of a dismal employment figures for May which showed a meager 83,000 posts created by the private sector across the country Bernanke expressed concern about the high number of long-term unemployed. The Fed chairman also pointed to the moribund housing market, as evidence that the Fed\'s stimulative policies needed to be maintained. \"The depressed state of housing in the United States is a big reason that the current recovery is less vigorous than we would like,\" he said. Virtually all segments of the construction industry remain troubled, he said. Despite low lending rates and affordable house prices, buyers have been scared away from the market by a mixture of tough bank loan rules and uncertainty in the jobs market. Adding to the litany of woes, Bernanke said that the government was no longer the crutch for the economy that it was during the height of the crisis. \"Fiscally constrained state and local governments continue to cut spending and employment. Moreover, the impetus provided to the growth of final demand by federal fiscal policies continues to wane.\" But in his first public comments on the recovery in nearly a month, Bernanke gave no hints that the Fed was ready to extend a controversial $600 billion monetary stimulus package that is due to end this month. Instead, he said, \"accomodative monetary policies are still needed,\" apparently a reference to record-low interest rates. Analysts said that stance was not a surprise. \"Even though his comments struck a rather negative tone, clearly voicing his displeasure with the labor market situation, we doubt they pointed to fresh stimulus,\" said Geoffrey Yu of UBS. Bernanke added that disruptions associated with the earthquake and tsunami in Japan continued to hamper growth in this quarter, but he expected the impact to wane. \"With the effects of the Japanese disaster on manufacturing output likely to dissipate in coming months, and with some moderation in gasoline prices in prospect, growth seems likely to pick up somewhat in the second half of the year,\" he said.