Wednesday, April 27, 2011

US Fed frets over unemployment, debt

US Federal Reserve Chairman Ben Bernanke is pictured at a news conference following a Fed meeting at the Federal Reserve in Washington, April 27, 2011.

Source: Press TV

US Federal Reserve Chairman Ben Bernanke has admitted that the country's massive unemployment and debt remain as two major stumbling blocks for a true economic recovery.

For the first time in its near-century of existence, the Federal Reserve has held a press conference after a two-day meeting on the outlook for the US economy, where Bernanke discussed the unemployment issue and the debt crisis, a Press TV correspondent reported on Wednesday.

"Long-term unemployment in the current economy is the worst, really the worst it's been in the post-war period," Bernanke said at the press briefing on Wednesday.

Bernanke acknowledged that the pace of improvement in the ailing US labor market remained "quite slow" and that about 45 percent of those without jobs have been unemployed for six months or longer.

"We know the consequences of that can be very distressing, because people who are out of work for a long time, their skills tend to atrophy," the US Fed chief noted.

Bernanke went on to say that the country's high debt levels are "the most important long-term economic problem facing the US."

Meanwhile, Dean Baker of the Center for Economic and Policy Research told Press TV that one of the reasons the Federal Reserve and its chairman have decided to hold these press conferences is to bring awareness to the general public of the high unemployment rate which Bernanke is trying to lower against the wishes of others in the Fed.

The remarks come as US Treasury Secretary Timothy Geithner has forecast that the US will hit its debt limit ceiling of $14.3 trillion on May 16, which means that the government will no longer be able to legally borrow money for its federal spending.

On April 21, US President Barack Obama echoed similar concerns, saying his country faces "unsustainable" financial situation as the national debt and budget deficit continue to weigh so heavily on the American psyche.

The US budget shortage has also hit a record $1.65 trillion this year --10.9 percent of GDP -- according to figures in Obama's 2012 budget.

US Standard & Poor's rating agency said last week that the agency's attitude toward America's overall economic condition has changed from "stable" to "negative," mainly due to US lawmakers' inability to reach a consensus over the ongoing budget crisis.

On April 13, Obama rolled out a wide-ranging deficit reduction plan aimed at slashing the country's budget shortfall by $4 trillion within 12 years, and ever since has been struggling to convince Americans that his plan can solve their financial woes.

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