APRIL 2008 BEACONFed Chief: Recession is Possible
Bernanke Finally Uses the "R" Word
<Reuters - April 2, 2008>In testimony before Congress today, Fed chief Ben Bernanke testified that while their current projections show slight growth, the Fed believes that “Recession is possible” in the first half of 2008. It was the first time he had acknowledged what many analysts have openly discussed for months.
Still, Bernanke suggested that steps taken by the Fed and other agencies to address the weak economy will find traction sometime in the back half of 2008 and that we will experience “sustainable” growth in 2009 and beyond.
Analysts noted that Bernanke made no commitment to "act as needed" to help the economy…a statement that has been a regular feature of his speeches lately. Some take this as a sign that interest rate cuts are over.
In a separate story out of China, Reuters reported that Treasury secretary Henry Paulson said on Thursday that, “There is no doubt we’re having a tough quarter, that the economy has turned down sharply.”
Paulson went on to suggest a thought that many economists would agree with, “We need to have this correction. It is not pleasant, but we need to have it.” Paulson was referring specifically to the correction taking place in the housing sector.