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Semiannual monetary policy report to the Congress: testimony before the Committee on Financial Services, U.S. House of Representatives, March 2, 2011

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  • Economics

Abstract

Testimony--Chairman Ben S. Bernanke For release on delivery 10 a.m. EST March 1, 2011 Semiannual Monetary Policy Report to the Congress Ben S. Bernanke Chairman Board of Governors of the Federal Reserve System before the Committee on Banking, Housing, and Urban Affairs United States Senate March 1, 2011 Chairman Johnson, Ranking Member Shelby, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress. I will begin with a discussion of economic conditions and the outlook before turning to monetary policy. The Economic Outlook Following the stabilization of economic activity in mid-2009, the U.S. economy is now in its seventh quarter of growth; last quarter, for the first time in this expansion, our nation’s real gross domestic product (GDP) matched its pre-crisis peak. Nevertheless, job growth remains relatively weak and the unemployment rate is still high. In its early stages, the economic recovery was largely attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies, and a strong boost to production from businesses rebuilding their depleted inventories. Economic growth slowed significantly in the spring and early summer of 2010, as the impetus from inventory building and fiscal stimulus diminished and as Europe’s debt problems roiled global financial markets. More recently, however, we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold. Notably, real consumer spending has grown at a solid pace since last fall, and business investment in new equipment and software has continued to expand. Stronger demand, both domestic and foreign, has supported steady gains in U.S. manufacturing output. The combination of rising household and business confidence, accommodative mon

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