Stock Market Watch

Policy Logjam Hurting U.S. Economy: Bernanke

by ·


While continued policy logjam in Washington with regard to deficit reduction issue was hurting the U.S. economy, according to the Federal Reserve’s Chairman, Ben Bernanke, he is confident that lawmakers will succeed in finding a middle path before the year-end.

After winding up Fed’s two-day FOMC meeting, Bernanke addressing a news conference said that both sides can prevent the U.S. economy from drifting away towards the edge of fiscal cliff—a series of automatic spending cuts and tax hikes from Jan 1— through reaching a successful deal.

Bernanke pointed out that lack of progress made in Washington has significantly hurt both investors’ and consumers’ sentiment with businesses forced to scale back on new investments or delay projects.

“Clearly the fiscal cliff is having effects on the economy,” said the Fed Chairman.

Bernanke believes that both the Whitehouse and Congress would do a world of good to the U.S. economy if they resolve their differences as soon as possible.

“I’m hoping that Congress will do the right thing on the fiscal cliff; there is a problem with kicking the can down the road,” added Bernanke.

Bernanke reiterated his fear that lest the White House and Republicans fail to cut a deal then subsequent massive spending cuts and tax hikes would adversely impact the U.S. economy even as the Federal Reserve will be left without any tool to stimulate it.

“We cannot offset the full impact of the fiscal cliff. It’s just too big,” cautioned the Fed Chairman.

Meanwhile, following latest round of talks on Wednesday, the White House indicated that Mr. Obama is prepared to go lower than his latest proposal of $1.4 trillion in new tax revenue over 10 years.

When asked about whether that number stands any chance to get accepted by the GOP-controlled House, White House press secretary Jay Carney replied, “The president has made clear his willingness to negotiate and compromise.”

More Posts by this author

edliston
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

You may also like...