US Federal Reserve Chairman Ben Bernanke on Monday said that the US economy still has far to go to recover to an acceptable state of health.
“Today the economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be,” he said.
The statement, made in a speech on banking in Stone Mountain, Georgia, came as economists and investors seek signs on whether the US central bank is ready to tighten up its easy money policy aimed at holding long-term interest rates down.
Since December last year, the Fed has stuck to its ultra-low rates and its US$85 billion per month quantitative easing bond-purchase program, despite economic indicators that led many to believe the economy is picking up speed.
Bernanke has consistently tied the tightening of monetary policy to a substantial improvement in unemployment, with the rate currently 7.6 percent, and his statement echoed comments made in previous months that he was not satisfied with the pace of recovery.
On Friday, the US Department of Labor reported that just 88,000 new jobs were generated last month, the slowest growth in nine months and well below the level needed just to keep the current jobless rate steady, much less lower it.
Despite some discussion in the Federal Open Market Committee’s January meeting that the quantitative easing program is increasingly risky for monetary management, Bernanke said most committee members had agreed that the bond purchases “continue to provide meaningful support to economic growth and job creation.”
“It’s very, very important that we act to address unemployment,” he said.
Separately, Alcoa Inc started off the US earnings season with a bang on Monday by reporting a larger first-quarter profit than analysts expected, helped by strong demand for aluminum used to make airplanes and automobiles.
Alcoa is the first company in the Dow Jones Industrial Average to report first-quarter results. Because its products wind up in so many things, from cars and buildings to soda cans, investors study Alcoa’s results for hints about earnings at companies in other industries.
Alcoa said net income in the first quarter was US$149 million, or US$0.13 per share, compared with the US$94 million, or US$0.09 per share, recorded a year earlier.
Revenue fell to US$5.83 billion from US$6.01 billion a year earlier and was below the US$5.91 billion that analysts predicted. Alcoa attributed this to lower aluminum prices and curtailed production in its European primary metals business.