Ben Bernanke, the chairman of the Federal Reserve Bank, said the U.S. economy is likely to grow by 3 percent to 4 percent in 2011 (a faster expansion than in 2010), but that such growth will not be sufficient to reduce unemployment to acceptable levels.
Speaking at an event sponsored by the Federal Deposit Insurance Corp. (FDIC), Bernanke stated that he sees the economy strengthening.
“It has looked better in the last few months,” he said. “We think a 3 to 4 percent-type of growth number for 2011 seems reasonable. Now that's not going to reduce unemployment at the pace we'd like it to, but certainly it would be good to see the economy growing and that means more sales, more business.”
Back in November, the central bank forecast 3 percent to 3.6 percent economic growth for 2011. 10-year yields have since surged to more than 3.3 percent from 2.6 percent.
Bernanke does not think there is much risk for a double-dip recession.
We're seeing some improvement in the labor market, I think deflation risk has receded considerably and so we're moving in the right direction, he said.
The unemployment rate declined to 9.4 percent from 9.8 percent last month, but remains well above historical norms. Bernanke recently warned that it would take five years for the jobless rate to ease to a more manageable 6 percent levels.
Bernanke also commented that “interest rates are higher, but I think that’s mostly because the news is better. It’s responding to a stronger economy and better expectations. So I think that the policy has helped.”