WASHINGTON - The outlook of the US economic recovery remained uncertain, as the recovery was confronted with a set of domestic and external headwinds, US Federal Reserve Chairman Ben Bernanke said on Thursday.
The US economy has been gradually recovering from the recent deep recession, but the pace of the recovery has been " frustratingly slow", particularly from the perspective of the millions of workers who remain unemployed or under-employed, Bernanke said in his testimony before the House Budget Committee.
The sluggish expansion has left the US economy vulnerable to shocks, including the supply chain disruptions stemming from the earthquake in Japan last year, a surge in the prices of oil and other commodities, and spillovers from the eurozone debt crisis, according to his written testimony.
Over the past few months, indicators of spending, production and job market activity have shown some signs of improvement, but "the outlook remains uncertain and close monitoring of economic developments will remain necessary", Bernanke added.
The US central bank chief cautioned that policymakers should balance their efforts of fiscal consolidation and sustaining economic growth, as some investors were worried about the spiking public debt in the United States.
"Even as fiscal policymakers address the urgent issue of fiscal sustainability, they should take care not to unnecessarily impede the current economic recovery," Bernanke said.
The two goals of achieving long-term fiscal sustainability and avoiding additional fiscal headwinds for the current recovery were "fully compatible" and "mutually reinforcing", he argued.
"On the one hand, a more robust recovery will lead to lower deficits and debt in coming years. On the other hand, a plan that clearly and credibly puts fiscal policy on a path to sustainability could help keep longer-term interest rates low and improve household and business confidence, thereby supporting improved economic performance today," Bernanke noted.