Ben Bernanke the Federal Reserve Chairman said that most of economic problems in the U.S., including the severe housing slump, will cause business growth to slow noticeably in coming months.
Fed policymakers last week cut a key interest rate for the second time in two months, but disappointed Wall Street by discouraging expectations that it would follow with further rate-cuts.
Bernanke said he and his colleagues believe economic activity will “slow noticeably in the fourth quarter” compared to the 3.9 percent pace of the third quarter. In his prepared remarks to the JEC, Bernanke said,
Growth was seen as remaining sluggish during the first part of next year, then strengthening as the effects of tighter credit and the housing correction begin to wane.
Many economists believe the economy’s maximum point of danger of falling into a recession will occur in the early part of next year.
A variety of problems from the steepest housing downturn in more than two decades to a severe credit crunch, surging oil prices and a falling dollar have roiled Wall Street in recent days, triggering big plunges in stock prices.
