The head of the United States Federal Reserve Ben Bernanke addressing the Joint Economic Committee of the Congress said that the American economy may recover from the nosedive and start to grow again as early as this year. Even in this case the business activity will remain restrained: companies will be careful with creating new working places. The level of unemployment will be high still and may get even higher in the next months.
The placid tone of the Federal Reserve’s head is likely to mean that the US authorities do not want (or are not able) to take further “anti-crisis” measures. They have already exhausted the potential of their main leverage – the discount rate. Now it is lowered down nearly to zero.
Ben Bernanke sees positive trends in the real estate market: after three years of recession it has seemingly reached a “bottom”. The consumer spending, which dropped rapidly in the second half of 2008, is showing signs of revival in the first quarter of 2009. In the next month, it must rise even higher due to tax remissions as part of the “anti-crisis plan” of President Barack Obama. The second measure of this plan is the increase of the government spending. The implementation of the president’s plan must make the economy grow in the third and fourth quarters this year. Another positive trend is the increase of the index of the Institute for Supply Management, which indicates the monthly activity in the service sector, but it is still below the threshold of 50 points.
The head of the Federal Reserve mentioned strong negative factors as well. Business investments remain very small, and the commercial property market is weak too.
However, Ben Bernanke and independent analysts do not lose hope. There are signs of recession’s end in other countries, and it must help American exporters.