Bernanke says keep an eye on recovery

Washington -- Federal Reserve Chairman Ben Bernanke called on U.S. lawmakers to view the federal budget with financial stability in mind.

Bernanke increased his rhetoric on the economy Tuesday, telling the Senate Budget Committee the past 18 months have been a period of "extraordinary turbulence."

Pointing to job losses and manufacturing declines, he said, "The recent near-term indicators show little sign of improvement."

However, he appeared to back the $787 billion economic stimulus bill, telling committee members the Congressional Budget Office estimated the package would raise the gross domestic product between 1 percent and "a little more than 3 percent" by the end of 2010.

Bernanke also said the federal budget included "new initiatives for energy, healthcare, education and tax policy," and said "Congress will have considerable work in evaluating how to proceed in each of these areas."

However, he warned, "without fiscal sustainability, in the longer term we will have neither financial stability nor healthy economic growth."

"Policymakers must remain prepared to take the actions necessary in the near term to restore stability of the financial system and to put the economy on a sustainable path to recovery," he said.

Copyright 2009 by United Press International.