JACKSON, Wyo. – Federal Reserve Chairman Ben Bernanke on Friday offered his most optimistic outlook since the financial crisis struck, saying the economy is on the verge of growing again.
Speaking at an annual Fed conference, Bernanke acknowledged no missteps by the central bank in managing the worst crisis since the Great Depression. But he conceded that consumers and businesses are still having trouble getting loans, even though the financial system is gradually stabilizing.
Economic activity in both the U.S. and around the world seems to be leveling out, and the economy is likely to start growing again soon, Bernanke said in a speech at an annual Fed conference in Jackson.
Bernanke’s hopeful remarks on the economy contributed to a rally on Wall Street. The Dow Jones industrial average increased about 155 points, or 1.7 percent, and broader stock averages also gained sharply.
Despite his upbeat tone, Bernanke cautioned that the recovery is likely to be “relatively slow at first.”
Unemployment, now at 9.4 percent, is widely expected to hit double digits later this year and to remain high for many months.
Figures released Friday by the Labor Department confirm that.
There were 15 states that had unemployment rates in double digits in July, with four – including California – posting their highest rates since at least 1976.
The report, which gives a regional breakdown of the national employment data released earlier this month, again put Michigan in the lead with the highest jobless rate – 15 percent. Workers had the best shot at finding employment in North Dakota, which again had the lowest rate – 4.2 percent.
“Although we have avoided the worst, difficult challenges still lie ahead,” Bernanke told the gathering of fellow bankers, academics and economists. “We must work together to build on the gains already made to secure a sustained economic recovery.”
Reviewing the past year’s crisis, Bernanke outlined the many emergency measures the Fed and other regulators took to help ward off a global financial meltdown. He declined to acknowledge critics’ arguments that regulators failed to detect signs of the crisis before it occurred – or that Wall Street bailouts sent a message that big companies that make reckless bets would be rescued with taxpayer money.
President Barack Obama will have to decide in coming months whether to reappoint or replace Bernanke, whose term expires early next year.
Ken Mayland, president of ClearView Economics, said Bernanke was engaging in a “bit of cheerleading to inspire confidence,” especially among consumers whose caution could restrain the recovery.
MarketWatch contributed to this report.