In his semi-annual testimony to the House Committee on Financial Services, Fed Chairman Ben Bernanke attributes poor credit conditions as a major factor in hindering key areas of the economy from recovery. 

One sector that lags the recovery is construction for family and commercial properties.  Bernanke attributes difficulty in this area to poor fundamentals and continued difficulty in obtaining financing.

The Fed Chairman stated that the job market was hit especially hard by the recession. 

For employers, the key drivers behind jobs cuts were declining revenues and concerns over credit availability.   As credit conditions for business show no marked improvement, the job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce.

Of particular concern for Bernanke is long-term unemployment.  He cites that more than 40 percent of the unemployment have not have a job for at least six months.  This percentage of the long-term unemployment is double the figure a year ago.

Bernanke states that conditions in the financial markets have continued to improve, with conditions for short-term funding have returned to near pre-crisis level.

However, bank lending has continued to contract.  The Fed Chairman attributes this to tightened lending standards and weak demand for credit amid uncertain economic prospects.