Bernanke: US job market still weak

Associated Press

WASHINGTON

Chairman Ben Bernanke says the U.S. job market remains weak despite three months of strong hiring and that the Federal Reserve’s existing policies will help boost economic growth.

Bernanke’s comments Monday to a group of economists in Arlington, Va., drove stocks higher. Many took his cautious words about the economy to mean the Fed is likely to stick to its plan to hold short-term interest rates at record lows through 2014.

Though the hiring has helped support consumer confidence and incomes, “we have not seen that in a persuasive way yet,” Bernanke said. The Fed needs to “remain cautious” in deciding what its next moves should be, he said.

Further job gains will likely require stronger consumer and business demand, Bernanke said in a speech to the National Association for Business Economics spring conference.

The association includes about 2,500 economists for corporations, universities, the government and trade associations. Each year, it meets in the spring and fall. Bernanke, addressing the group for the first time since 2008, attracted about 600 participants — a record for a spring conference.

After he spoke, the Dow Jones industrial average surged and finished up 160 points, its third-biggest gain of the year. Broader indexes also gained.

The gains in hiring since December had led some economists to predict that the Fed might consider raising rates earlier than it planned. But many took Bernanke’s cautious tone Monday as a firmer commitment to the late-2014 timetable.

And some viewed the speech as a signal that the Fed might take further steps, if the economy falters, to try to further drive down long-term borrowing rates. The goal would be to encourage more spending by con-sumers and businesses.

Employers added an average of 245,000 jobs a month from December through February. The unemployment rate has fallen nearly a full percentage point since summer, to 8.3 percent.

Still, the economy grew at an annual pace of just 3 percent in the October-December quarter. And economists think growth has slowed in the January-March quarter to around a 2 percent annual rate.

The Fed is concerned that the recovery could falter, as it did last year. Americans aren’t getting meaningful pay increases. Gas prices are high. And Europe’s debt crisis could weigh on the U.S. economy.