A deepening housing slump probably will be a “significant drag” on U.S. economic growth into next year and it will take time for Wall Street to fully recover from a painful credit crisis, Federal Reserve Chairman Ben Bernanke warned.
Bernanke once again pledged last week to “act as needed” to help financial markets — which have suffered through several months of turbulence — function smoothly and to keep the economy and inflation on an even keel.
“Conditions in financial markets have shown some improvement since the worst of the storm in mid-August, but a full recovery of market functioning is likely to take time, and we may well see some setbacks,” Bernanke said in a speech to the New York Economic Club. A copy of his remarks was made available in Washington.
It was Bernanke’s most extensive assessment of America’s current economic situation since the August turmoil unhinged Wall Street.
The ultimate implications of the credit crunch on the broader economy, however, remain “uncertain,” the Fed chief said.
