According to Federal Reserve Chairman Ben Bernanke, the national economy should start growing again later this year, but warned that economic activity is expected to be slow to gain momentum. Since December 2007, the start of the economic recession, more than 5.1 million jobs have been lost and Bernanke notes that the unemployment rate could remain high in the short term.
This news is the Fedâ€™s most optimistic assessment of the country’s financial health since last year. Although the housing market has been in a slump for the past three years, indicators are showing some signs of bottoming, and consumer spending improved in the first quarter of this year. Even on the financial front, there have been signs of improvements, but according to the International Monetary Fund, an estimated $275 billion in additional capital is needed to safeguard against further losses at U.S. banks.
The Fed expects consumer spending to continue to gradually improve as tax cuts implemented by President Barack Obama’s $787 billion stimulus package take effect. Private analysts also agree that as Obama’s stimulus package takes hold, the economy could start growing again in the third or fourth quarter of this year. However, businesses will likely remain cautious about hiring, which could push the nation’s unemployment rate higher in the coming months.