Bernanke sees constrained growth ahead

Speaking in New York City at The Economic Club Monday, Bernanke said, "my own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely."

"Significant economic challenges remain," he said. "The flow of credit remains constrained, economic activity weak, and unemployment much too high."

However, he said, promising signs include "strengthening consumer spending outside of autos, a nascent recovery in home construction, continued stabilization in financial conditions, and stronger growth abroad."

Of most immediate concern, "constrained bank lending and a weak job market likely will prevent the expansion from being as robust as we would hope," he said.

He discussed weakness in the commercial real estate market, which looks to mimic the bubble that burst in the housing market beginning in 2006.

"Demand for commercial property has dropped as the economy has weakened, leading to significant declines in property values, increased vacancy rates, and falling rents," all of which undermine the loans that support business.

Copyright 2009 by United Press International.