Bernanke Sees the End of the Recession

  The current recession that has tormented the U.S. and the world since December 2007 is “very likely over at this point,” Federal Reserve Chairman Ben Bernanke recently said.

During questioning however, Bernanke stated that we can expect an sluggish economy well into 2010.  “From a technical perspective the recession is very likely over,” Bernanke said, cautioning that unemployment is likely to remain high.  “It’s still going to feel like a very weak economy for some time, as many people will still find that their job security and employment status is not what they wish it was.”  

Bernanke points out that there are still “head winds” that will slow growth, like an impaired credit system, households still trying to dig out from personal debt and ongoing adjustments in many sectors of the economy, such as construction and autos. The government will also have to refine a great deal of its stimulus plan to avoid inflation. Higher inflation will lead to a slower recovery and increased unemployment. 

When looking at the long-term, Bernanke said that a critical part in the global expansion of credit is unlikely to recover anytime soon due to damage that was caused. “My forecast would be that the shadow banking system — securitization markets — will come back, will be a substantial part of the U.S. credit system.  But they will certainly, at least in the medium term, be simpler, smaller, less opaque, subject to more oversight by regulators,”

These are positive words from the Fed cheif, but it seems we will have to be patient to see a full recovery of our badly damaged economy.