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Wednesday 22nd of October 2008
October 20, 2008

Ben Bernanke: US economy in very serious slowdown


by Kay Murchie
”Ben

The US Federal Reserve’s Chairman, Ben Bernanke, is suggesting that the US needs another cash boost to encourage spending and promote consumer confidence.

The suggestion comes after the country recently announced a $700 billion (£380 billion) package to rescue the country’s ailing banking industry.

Mr Bernanke believes further Government spending may be required after he warned that the US economy is now in a ‘very serious slowdown‘.

He told the US House of Representatives budget committee that consideration of a fiscal package by Congress seems appropriate, as the economy is likely to be weak for several quarters and with some risk of a protracted slowdown.

Mr Bernanke believes the package should include measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers.

He believes these measures might be effective at boosting economic growth and lead to new jobs.

Mr Bernanke’s proposed scheme follows a plan announced last week by House of Representatives Speaker, Nancy Pelosi. Ms Pelosi is looking for support for a new $150 billion rescue package to increase food stamps for low income families and extend unemployment benefits.

Food stamps were established in 1943 and are part of a federal programme that provides very low-income families with an allowance to spend on groceries. The US Government pays nearly $30 billion a year in food stamps to 28 million Americans.

Following Mr Bernanke’s comments, the Dow Jones Industrial Average rose 187.49 to 9039.71, which resulted in the FTSE 100 index in London soaring 149.26 points to 4212.27, despite the news that the UK is on the brink of a recession.

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