The economy has shown signs of improvement while remaining vulnerable to shocks, the Federal Reserve Chairman Ben S. Bernanke stated today on the Economic Outlook and the Federal Budget Situation before the House Budget Committee on Thursday.
Fortunately, over the past few month, indicators of spending, production, and job-market activity have shown some of improvement, Bernanke said today in Washington. However, the Fed Chairman remarked that the current situation could cause a fiscal hazard with the elevated budget deficit.
Bernanke highlighted increasing federal budget deficits are significantly threatening the U.S economy, and are likely to start another crisis if not controlled. Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences, Bernanke added.
One week after the FOMC statement and the Fed extended the pledge to keep the federal fund rate at exceptionally low level at least through late 2014, Bernanke reiterated he expects inflation to remain down and the dollar stable. Inflation currently looks to be very well controlled, and we are not having any signs of higher inflation or declining dollar.