U.S. Federal Reserve Chairman Ben Bernanke told Congress Thursday he sees a slowing U.S. economy heading into 2008.Bernanke, in a prepared testimony to the U.S. Congress' Joint Economic Committee, said he expects the economy to slow "noticeably" from its third-quarter growth rate and remain sluggish in the first half of 2008. The U.S. economy grew at a 3.9% rate in Q3.
Further, Bernanke added the Fed will make sure that the potential inflationary effect from higher import prices -- stemming from a falling dollar -- does not work itself into the general economy and increase inflation.
Not concerned about China's holdings
Bernanke added that he's "not particularly concerned about the holdings of China or any other particular country." China announced Wednesday that it would seek to diversify its foreign currency reserves and increase its holdings of stronger currencies. Over the past two years, the U.S. dollar has fallen substantially against the euro and the pound, among other currencies. Further, Chairman Bernanke underscored that he doesn't believe the dollar's substantial decline will change its status as the world's primary reserve currency.
"The dollar remains the dominant reserve currency around the world and I expect that to remain the case," Bernanke said.
For more than 50 years, the U.S. dollar has served as the world's reserve currency due to the currency's retained value over time, the strength and transparency of the U.S.'s financial / economic system and the U.S.'s adherence to democracy and the rule of law, among other factors.
Global imbalances
Bernanke also said he would like to see China stimulate domestic consumption to help address current global economic imbalances.
"They [China] need to reorient their growth toward domestic needs, by increasing consumer spending," Bernanke said, while noting China's high savings rate. Bernanke argued that China's economy has developed to a point where its domestic consumers can continue to drive strong growth in the country, while simultaneously taking pressure for China's need to generate growth through the sale of exports -- a scenario that would reduce global imbalances.
Bernanke added that he's "not particularly concerned about the holdings of China or any other particular country." China announced Wednesday that it would seek to diversify its foreign currency reserves and increase its holdings of stronger currencies. Over the past two years, the U.S. dollar has fallen substantially against the euro and the pound, among other currencies. Further, Chairman Bernanke underscored that he doesn't believe the dollar's substantial decline will change its status as the world's primary reserve currency.
"The dollar remains the dominant reserve currency around the world and I expect that to remain the case," Bernanke said.
For more than 50 years, the U.S. dollar has served as the world's reserve currency due to the currency's retained value over time, the strength and transparency of the U.S.'s financial / economic system and the U.S.'s adherence to democracy and the rule of law, among other factors.
Global imbalances
Bernanke also said he would like to see China stimulate domestic consumption to help address current global economic imbalances.
"They [China] need to reorient their growth toward domestic needs, by increasing consumer spending," Bernanke said, while noting China's high savings rate. Bernanke argued that China's economy has developed to a point where its domestic consumers can continue to drive strong growth in the country, while simultaneously taking pressure for China's need to generate growth through the sale of exports -- a scenario that would reduce global imbalances.
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Reader Comments (Page 1 of 1)
11-08-2007 @ 2:31PM
ALASTAIR said...
Bernanke is in a real rut. He's got a melt down and hyper inflation facing him. Greenspan handed him interest rates brought down to absurdly low levels. Thus sparking a speculative boom the entire world bought into, and now Bernanke compounds matters by saying he thinks the housing crisis may start to subside within six months. Is this joke suppose to reassure us?
Bernanke, Greenspan, and Bush are leading us into a depression, civil unrest, plus hyper inflation. Bernanke may not know it yet, but Congress and the public do.
Our national dumb dumb in the Offal Office doesn't care because he'll be gone, but wait til his Texas cowpies hit the fan.
I feel very sorry for whoever succeeds, this the most disastrous president in our Nation's history.
11-08-2007 @ 2:58PM
Mort said...
LOTS of problems for 2008...
The dollar is the weakest in decades, significant credit problems are bombing major banks, oil is at nearly $100 predicting a major gasoline price increases soon, home foreclosure numbers are bad and growing, housing is literally frozen and falling, grocery and energy prices are soaring with electricity and natural gas expected to go up 15-20% this winter, medical costs are jumping and the huge illegal alien problem remains,
... and manufacturing jobs continue to go overseas...
and we have a $12 BILLION A MONTH war full of corruption that we can't seem to win.
Whoever thought a Republican administration would put America in such poor financial shape???
11-26-2007 @ 1:31AM
Carlos R. Aevizu Sr said...
It's a very difficult to understand all of the pieces that keep the economic system in perfect harmony, with The price of crude oil is cruising the $100-per-barrel mark, the real estate market taking a beating in some areas, the financial market is riddled with bullets caused by the subprime turmoil, brought on by the federal reserves actions, raising short term interest rate hikes (Fed Funds rate) 17 consecutive months in a row to curb the speed of appreciation to slow down an over heated real estate market. Another piece of the puzzle is having it's own share of problems, the dollar has been hammered lately, and continues to stumble lower to other currencies. The result has been a sharp decline in the stock market, causing it to give back almost all of 2007's gains.
Maybe it's time It's time to get back to basics.
Carlos R. Arvizu Sr.