Fed chairman: Recession is very likely over
US Federal Reserve chairman, Ben Bernanke, said yesterday: “From a technical perspective, the recession is very likely over.”
Mr Bernanke’s comments come one year after the collapse of US bank Lehman Brothers.
Speaking at a conference at the Brookings Institution, a think tank based in Washington, Mr Bernanke did caution, however, that due to unemployment the economy will remain weak for some time.
Mr Bernanke, who was recently re-appointed as chairman of the US central bank for a further four-year term, added that there is a risk that labour markets will remain weak throughout 2010.
Meanwhile, Vince Reinhart, of the American Enterprise Institute, added that growth will be positive in the third quarter.
The news came as the Commerce Department revealed a rise in US retail sales for the month of August, helped by the US Government’s Car Allowance Rebate System (CARS), branded the “cash for clunkers” scheme.
Retail sales rose by 2.7% in August, compared with July and was the biggest monthly gain since January 2006. However, on an annual basis, sales fell by 5.3%.
The popular “cash for clunkers” scheme, which was designed to help bring the US economy out of recession by boosting new car sales, gives car owners federal subsidies of up to $4,500 (£2,600) for trading in their old cars for new ones.
However, the scheme has now ended after the $3 billion funding set aside for it ran out. Commenting on the retail sales figures, David Sloan at 4Cast comments: “The retail sales obviously was inflated by the cash for clunkers, and the autos rise is going to be reversed.”
In the meantime, US producer prices rose by 1.7% in August – more than expected, due to a 23% rise in petrol prices – the biggest in over a decade, figures from the Labor Department showed.
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