US Economy 'Could Recover by 2010'
The US economy is undergoing a "severe contraction" but could recover by 2010 if swift action is taken, the US Federal Reserve chairman has said.
Bernard Bernanke told the senate banking committee on Tuesday that things could get worse in 2009, but that there was a "reasonable prospect" of recovery by 2010.
However, to ensure recovery, Bernanke said it was essential "that we [the US] continue to complement fiscal stimulus with strong government action to stabilise
financial institutions and financial markets".
Bernanke's comments comes as US consumers' confidence hit an all time low amid continuing concerns about the financial crisis, a private research group said.
The New York-based Conference Board said on Tuesday its consumer confidence index last month suffered its worst reading since it began in 1967, falling from 37.4 to 25.
In addition Barack Obama, the US president, is due to give his first speech to the US congress in which he is expected to discuss the implementation of a $787bn stimulus package passed by congress earlier in February in a bid to avert an economic crisis.
Recovery concerns
Bernanke said radical actions by the US government since late last year when the financial crisis intensified have relieved some credit and financial strains in US markets.
However, he warned, "despite these favorable developments, significant stresses
persist in many markets, notably most securitisation markets remain shut ... and some financial institutions remain under pressure.''
Over the weekend it was reported that Citigroup and the Bank of America could receive more government funds to cover losses on risky investments.
And on Monday US insurance giant AIG, which has already received about $150bn of US government aid, asked for more aid ahead of preparing for a record fourth-quarter loss of roughly $60 billion, Reuters news agency reported.
Meanwhile the slump in consumer confidence was larger than expected, and compares with a reading of 76.4 taken at the same time last year.
The board's expectations' index, which examines US consumers' outlook over the next six months, also slumped to 27.5 from 42.5, showing marked fears from consumers that continued job losses and market volatility were affecting the economy.
Cash plea
The Obama administration is hoping its $787bn stimulus package of increased government spending and tax cuts will turn the US economy around, along with the revamped $700bn financial bailout package passed last year under the former administration of George Bush.
Housing, credit and financial crises have plunged the US economy into its worst economic crisis since the Great Depression of the 1930s.
US stocks remained slightly higher on Tuesday, a day after hitting 12-year lows, with the Dow Jones Industrial Index opening up 15 points at 7,130.
Concerns over the global economy led to stock markets falling in Asia and Europe on Tuesday, with London's FTSE 100 index sliding by 0.36 per cent.
Markets dive
In Paris, the CAC 40 dropped one per cent as Frankfurt's DAX 30 dipped 0.37 per cent.
Japan's benchmark Nikkei share average closed 1.5 per cent lower while Hong Kong's Hang Seng lost nearly four per cent and South Korea's Kospi more than three per cent.
Other markets across the region also dived after US stocks fell more than three per cent - recording their lowest close since 1997.
Singapore, Taiwan and India's markets dropped around one per cent each with Shanghai recording a fall of more than three per cent.
Bernard Bernanke told the senate banking committee on Tuesday that things could get worse in 2009, but that there was a "reasonable prospect" of recovery by 2010.
However, to ensure recovery, Bernanke said it was essential "that we [the US] continue to complement fiscal stimulus with strong government action to stabilise
financial institutions and financial markets".
Bernanke's comments comes as US consumers' confidence hit an all time low amid continuing concerns about the financial crisis, a private research group said.
The New York-based Conference Board said on Tuesday its consumer confidence index last month suffered its worst reading since it began in 1967, falling from 37.4 to 25.
In addition Barack Obama, the US president, is due to give his first speech to the US congress in which he is expected to discuss the implementation of a $787bn stimulus package passed by congress earlier in February in a bid to avert an economic crisis.
Recovery concerns
Bernanke said radical actions by the US government since late last year when the financial crisis intensified have relieved some credit and financial strains in US markets.
However, he warned, "despite these favorable developments, significant stresses
persist in many markets, notably most securitisation markets remain shut ... and some financial institutions remain under pressure.''
Over the weekend it was reported that Citigroup and the Bank of America could receive more government funds to cover losses on risky investments.
And on Monday US insurance giant AIG, which has already received about $150bn of US government aid, asked for more aid ahead of preparing for a record fourth-quarter loss of roughly $60 billion, Reuters news agency reported.
Meanwhile the slump in consumer confidence was larger than expected, and compares with a reading of 76.4 taken at the same time last year.
The board's expectations' index, which examines US consumers' outlook over the next six months, also slumped to 27.5 from 42.5, showing marked fears from consumers that continued job losses and market volatility were affecting the economy.
Cash plea
The Obama administration is hoping its $787bn stimulus package of increased government spending and tax cuts will turn the US economy around, along with the revamped $700bn financial bailout package passed last year under the former administration of George Bush.
Housing, credit and financial crises have plunged the US economy into its worst economic crisis since the Great Depression of the 1930s.
US stocks remained slightly higher on Tuesday, a day after hitting 12-year lows, with the Dow Jones Industrial Index opening up 15 points at 7,130.
Concerns over the global economy led to stock markets falling in Asia and Europe on Tuesday, with London's FTSE 100 index sliding by 0.36 per cent.
Markets dive
In Paris, the CAC 40 dropped one per cent as Frankfurt's DAX 30 dipped 0.37 per cent.
Japan's benchmark Nikkei share average closed 1.5 per cent lower while Hong Kong's Hang Seng lost nearly four per cent and South Korea's Kospi more than three per cent.
Other markets across the region also dived after US stocks fell more than three per cent - recording their lowest close since 1997.
Singapore, Taiwan and India's markets dropped around one per cent each with Shanghai recording a fall of more than three per cent.
source: http://english.aljazeera.net
