End Of Depression Nowhere In Sight: Bernanke Lowers Economic Forecast, Stocks Plummet
Jun 22, 2011 3 Comments ›› Pat Dollard
Washington (AP) – The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 as planned and announced no further efforts to boost the economy.
Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for “an extended period,” a promise it’s made for more than two years.
Fed officials said in a statement that they think the main causes of the economy’s slowdown, such as high gas prices and supply disruptions from Japan’s disasters, are temporary. Once those problems subside, Fed officials said the economy should rebound.
Still, the statement stood in contrast to the Fed’s more upbeat view when officials last met eight weeks ago. At that time, the central bank said the job market was gradually improving.
The new statement acknowledged the slowdown that’s occurred over the past two months. The economy added just 54,000 jobs in May, far fewer than in the previous two months. Consumer spending has weakened, too.
SAN FRANCISCO (AP) — U.S. stocks ended with solid losses Wednesday after the Federal Reserve lowered its economic forecast and Chairman Ben Bernanke commented on the risks to the U.S. from a European debt default. After trading close to the flatline ahead of Bernanke’s 2:15 p.m. news conference, the Dow Jones Industrial Average ended the session down 80.3 points, or 0.7%, to 12,109.67. The S&P 500 slid 8.4 points, or 0.7%, to 1,287.14. The Nasdaq Composite lost 18.07 points, or 0.7%, to 2,669.19. Bernanke said U.S. banks’ direct exposure to Greece was small but noted a disorderly sovereign default would likely roil global financial markets. He also said it was unclear how much of the U.S. slowdown was temporary or permanent.
