Bernanke: Economy Slumping, Slower Growth Ahead

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WASHINGTON -- Federal Reserve Chairman Ben Bernanke had grim news about the economy Tuesday, telling lawmakers U.S. growth is slumping in several areas.

Not only has the economy slowed, but he told senators growth is likely to slow even further.

Forecasts for unemployment didn't provide any hope either.

"The reduction in the unemployment rate seems likely to be frustratingly slow," Bernanke said. "Indeed, the central tendency of participants' forecasts now has the unemployment rate at seven percent or higher at the end of 2014."

While lawmakers pushed the Federal Reserve to do something to spur the economy and job growth, Bernanke was vague in explaining how the department would respond.

"So the recession is deeper, more prolonged and stickier than anyone thought," Sen. Charles Schemer, D-N.Y., said. "These conditions would certainly motivate the Fed to seriously consider taking further action to bolster the economy."

"We will act in an apolitical, non-partisan manner to do what's necessary for the economy," Bernanke said in response.

A new study by the National Association for Business Economics showed more bad news on the jobless front. Almost double the amount of American companies now expect sluggish growth compared to a few months ago.

As a result, only 23 percent of U.S. companies plan to hire new workers. Just three months ago, 39 percent planned on more hiring.

Consumer spending also fell in June for the third month in a row, according to the Commerce Department.

That was the longest slump in consumer spending since the worst part of the 2008 global financial crisis.

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Paul  Strand

Paul Strand

CBN News Washington Sr. Correspondent

As senior correspondent in CBN's Washington, D.C., bureau, Paul Strand has covered a variety of political and social issues, with an emphasis on defense, justice, and Congress.  Follow Paul on Twitter @PaulStrandCBN and "like" him at Facebook.com/PaulStrandCBN.