Bernanke offers no new steps, leans on Congress

Associated Press

JACKSON HOLE, Wyo.

Federal Reserve Chairman Ben Bernanke has a message for Congress: Do more to stimulate hiring and growth — or risk delaying the economy’s return to full health.

Bernanke held out the prospect Friday that the Fed may take further steps later to help the economy. But he offered no new plans.

At a time when Congress has focused on shrinking budget deficits, Bernanke agreed that doing so is important for the long term. But he warned lawmakers not to “disregard the fragility of the current economic recovery.”

Investors had hoped Bernanke would use his much-anticipated speech at an economic conference in Jackson Hole to unveil some aggressive measure to jolt the economy.

He didn’t. But he did say the Fed’s September policy meeting will be extended to two days, instead of the scheduled one, to permit a “fuller discussion” of the central bank’s options.

Investors seemed to take comfort from Bernanke’s view that the job market and the economy will return to full health in the long run and the notion that the Fed might provide more help in the future.

After initial losses, the Dow Jones industrial average closed up 134 points. Broader stock indexes also gained.

Bernanke’s speech came shortly after the government said the economy grew at a scant 1 percent annual rate in the April-June quarter — even slower than previously estimated.

The economy is still hobbled by a depressed housing market, high oil prices and fears that the European debt crisis will deteriorate into a repeat of the 2008 financial crisis.

The Dow has lost about 11 percent of its value since late July on fears that the economy might slip back into recession.

On Friday, Bernanke blamed this summer’s political squabbling over raising the federal debt limit for undermining consumer and business confidence. And he warned that further gridlock in Washington would “pose ongoing risks to growth.”

The Fed chief noted that the depressed housing sector has delayed a full recovery in the broader economy. He said the home market should gradually return to health — a process he said the government should support.