Federal Reserve Chairman Ben S. Bernanke said on Wednesday unemployment is likely to increase following the release of the recent unemployment claims data from the labor market in May.
Bernanke said the “loss of nearly 6 million jobs since the beginning of 2008”, has made up the bulk of the recession cost as he spoke before lawmakers in Washington.
Bernanke said he expects the labor market to remain weak for some time. And given the size of the output gap - the difference between the economy's growth rate and its noninflationary potential - inflation should stay under control, Bernanke said.
Among the gloom there were also words of hope as Bernanke said growth is expected later this year; however not at a fast rate. Growth will remain at a lower rate than its potential.
“We continue to expect overall economic activity to bottom out, and then to turn up later this year”, Bernanke said.