Bernanke offers bleak view on U.S. economy
By Michael M. Grynbaum Published: April 2, 2008
Ben Bernanke, the chairman of the Federal Reserve, presented hisbleakest assessment yet of the economy on Wednesday morning, warning aCongressional committee that economic growth was likely to stagnate -and perhaps even contract - over the first half of the year.
In his first public remarks since the Fed orchestrated anunprecedented bailout of the brokerage firm Bear Stearns, Bernankedefended the central bank's actions against accusations of "moralhazard" and acknowledged considerable problems in the broader economy.
He also said the Fed's steps to restore confidence in the creditmarkets had "helped stabilize the situation somewhat" and wouldprobably stimulate an economic recovery after the summer. But he warnedthat the current turbulence made the economic outlook difficult topredict.
"The uncertainty attending this forecast is quite high and the risksremain to the downside," he said, in remarks for delivery Wednesdaymorning to the Joint Economic Committee.
Over all, Bernanke said, "it now appears likely that real grossdomestic product will not grow much, if at all, over the first half of2008 and could even contract slightly."