'Numerous Difficulties' Weigh on Economy

AP,
Posted: 2008-07-17 11:15:38
Filed Under: Work & Money
WASHINGTON (July 15) - Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the fragile U.S. economy is being confronted by "numerous difficulties" including persistent strains in financial markets, rising joblessness and housing problems, despite aggressive interest rate reductions and other fortifying steps over the past year.

Economic Woes in the U.S.

    A Walgreens Pharmacy is picture in Burbank, California, June 23, 2008. Walgreen Co. on Monday posted a 2 percent increase in quarterly profit as a weak U.S. economy and slowing growth in demand for prescription drugs muted sales. REUTERS/Fred Prouser (UNITED STATES)

    Reuters

    A customer drives away from the drive-through pharmacy line at a Walgreens Pharmacy in Burbank, California, June 23, 2008. Walgreen Co. on Monday posted a 2 percent increase in quarterly profit as a weak U.S. economy and slowing growth in demand for prescription drugs muted sales. REUTERS/Fred Prouser (UNITED STATES)

    Reuters

    The FedEx website is see at an office in Miami, Florida June 18, 2008. Package delivery company FedEx Corp on Wednesday forecast a weak fiscal 2009 after posting a quarterly loss it blamed on rising fuel prices, an ailing U.S. economy and a previously announced write-down. REUTERS/Carlos Barria (UNITED STATES)

    Reuters

    A Federal Express tractor trailer heads out from a FedEx station in Los Angeles, California June 18, 2008. FedEx Corp on Wednesday reported a quarterly loss, citing record-high fuel prices, a weak U.S. economy and a previously announced write-down due to the package delivery company's decision to change the name of FedEx Kinko's. REUTERS/Fred Prouser (UNITED STATES)

    Reuters

    A FedEx delivery truck drives past in Miami Beach, Florida June 18, 2008. Package delivery company FedEx Corp on Wednesday forecast a weak fiscal 2009 after posting a quarterly loss it blamed on rising fuel prices, an ailing U.S. economy and a previously announced write-down. REUTERS/Carlos Barria (UNITED STATES)

    Reuters

    FedEx equipment sits on the tarmac at Logan International Airport in Boston, Massachusetts June 18, 2008. Package delivery company FedEx Corp on Wednesday forecast a weak fiscal 2009 after posting a quarterly loss it blamed on rising fuel prices, an ailing U.S. economy and a previously announced write-down. REUTERS/Brian Snyder (UNITED STATES)

    Reuters

    A FedEx plane sits on the tarmac at Logan International Airport in Boston, Massachusetts June 18, 2008. Package delivery company FedEx Corp on Wednesday forecast a weak fiscal 2009 after posting a quarterly loss it blamed on rising fuel prices, an ailing U.S. economy and a previously announced write-down. REUTERS/Brian Snyder (UNITED STATES)

    Reuters

    A delivery truck returns to a FedEx sort facility in Boston, Massachusetts June 18, 2008. Package delivery company FedEx Corp on Wednesday forecast a weak fiscal 2009 after posting a quarterly loss it blamed on rising fuel prices, an ailing U.S. economy and a previously announced write-down. REUTERS/Brian Snyder (UNITED STATES)

    Reuters

    A customer walks past a FedEx Kinko's print and copy center in Burbank, California June 18, 2008. FedEx Corp on Wednesday reported a quarterly loss, citing record-high fuel prices, a weak U.S. economy and a previously announced write-down due to the package delivery company's decision to change the name of FedEx Kinko's. REUTERS/Fred Prouser (UNITED STATES)

    Reuters

    A Federal Express truck goes out on deliveries from a FEDEX station in Los Angeles, Calfiornia June 18, 2008. FedEx Corp on Wednesday reported a quarterly loss, citing record-high fuel prices, a weak U.S. economy and a previously announced write-down due to the package delivery company's decision to change the name of FedEx Kinko's. REUTERS/Fred Prouser (UNITED STATES

    Reuters

At the same time, Bernanke, testifying before the Senate Banking Committee, said rising prices for energy and food are elevating inflation risks.

The situation, he said, poses "significant challenges" for Fed policymakers as they try to chart the best course for keeping the economy growing, while making sure inflation doesn't dangerously flare up. All the economy's problems, including slumping home values, which threaten to make people feel less wealthy and less inclined to spend in the months ahead, represent "significant downside risks" to economic growth.

Over the risk of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.

And at the same time, inflation has remain high and "seems likely to move temporarily higher in the near term," he warned.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.

2008-05-04 10:45:12
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