Bernanke: Recovery continues but 'won't feel terrific'

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke says he expects a continuing economic recovery - "but it won't feel terrific."

In an interview at a forum late Monday in Washington, Bernanke dodged a question about whether he fears a double-dip recession, saying "nobody knows with any certainty."

"But there seems to be a good bit of momentum in consumer spending and investment, so my best guess is that we'll have a continued recovery," Bernanke told veteran TV journalist Sam Donaldson. "The reason it won't feel terrific is because it's not going to be fast enough to put back 8 million people who lost their jobs within a few years. It's going to take a while."

He warned the unemployment rate will remain high "for a while," explaining, "that means that a lot of people are going to be under financial stress."

In an unusually wide-ranging interview with Donaldson at the Woodrow Wilson International Center for Scholars in Washington, the Fed chairman spoke with a little more candor than usual, Bernanke said he couldn't predict when the Fed would raise interest rates next. But he said it depends on the state of the economy, unemployment rates and inflation trends.

"The reason we don't tell people is not because we're perverse, it's because we don't exactly know when," Bernanke said.

Bernanke talked about the need for U.S. leaders to take control of the nation's deficits over the medium term, some three to six years from now, in a way "that will allow us to bring our fiscal house in order over a long period of time."

But when asked if the nation has such a plan, or if he's seen one, Bernanke said: "No. Not yet. I don't."

He wouldn't give recommendations as to whether Congress should raise taxes to cut deficits.

"That's a political question, I'm not going to try to make Congress' decision for them, they wouldn't pay attention to me anyway," Bernanke said.

Wall Street reform: Bernanke also said he agreed in principle with a provision in the Senate's regulatory reform bill that would eventually prevent banks from making risky trades for their own accounts. The measure, named for former Fed chair Paul Volcker, aims to stop so-called proprietary trading.

But Bernanke said he didn't want a blanket ban that would prohibit banks from being able to legitimately hedge risk in some cases.

He said he favors the Senate version which gives regulators, including himself, the power to figure out when a bank is shedding risk as a "legitimate customer service" and when is it "gambling with the banks' capital -- ultimately with taxpayers as a backstop."

"I think it could be made to work," he added. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,285.74 0.34 0.00%
Nasdaq 5,090.79 19.05 0.38%
S&P 500 2,130.82 4.97 0.23%
Treasuries 2.18 -0.07 -2.93%
Data as of 5:27am ET
Company Price Change % Change
Bank of America Corp... 16.73 -0.01 -0.06%
AT&T Inc 35.07 0.45 1.30%
General Electric Co 27.72 0.08 0.29%
Apple Inc 131.39 1.33 1.02%
Yahoo! Inc 43.68 0.88 2.07%
Data as of May 21
Sponsors

Sections

Building the replacements for tens of millions defective airbags and finding owners of the recalled cars will be a difficult and time-consuming process. More

Chelsea Clinton took the stage during Internet Week New York to discuss a new report that looks at the state of women around the world. More

Google apologized for and fixed Google Maps issue where users were taken to the White House if they type in variations of the n-word. More

For $2,000 a month, Beacon will offer unlimited flights between New York and Boston -- and plans to add more cities soon. More

Rents increased 4% in April from last year while home values only rose 3% during the same time period. More