MercoPress. South Atlantic News Agency

US economy still slow says Fed; polls show Americans gloomy but optimistic

Bernanke says housing still weighing down on growth

The US economy is not fully recovered from its deep recession, with housing still weighing on growth, Federal Reserve Chairman Ben Bernanke said on Friday in a speech spelling out ways the US central bank has studied lower income communities.

“Our economy is far from where we would like it to be,” he said in prepared remarks to a conference.

The Fed earlier this week said it will see its 600 billion US dollars bond buying program, launched in November to spur a weak recovery, through to its planned conclusion at the end of June.

The world's largest economy grew at a sluggish 1.8% annual rate in the first three months of the year, but unemployment is still at a lofty 8.8%.

“Obviously, the problems in the labour market and the housing market are not unrelated,” he said.

Bernanke said Fed research shows loans to individuals and businesses through community development financial institutions can boost economic activity. That business generates tax revenues that in turn permit government spending in ways that benefit these communities, he said.

“We at the Federal Reserve will remain closely attuned to the economic health of all communities, including low- and moderate-income communities,” Bernanke said.

Bernanke said the economy is recovering at a moderate pace, and that there has been “welcome, if gradual” improvement in labour markets.

The Fed chief words coincide with a survey release indicating that half of Americans are hopeful about their future despite the gloomy outlook for the economy.

The poll of about 2,000 adults showed that although only 16% of Americans consider themselves well off or upper middle class now, 50% think they will be in five to ten years. But two thirds of those questioned admitted they're just keeping even and they think the economy still hasn't bottomed out.

“Despite a sluggish economic recovery ... Americans are markedly optimistic that the future will be brighter for themselves and their families,” said Michelle Peluso, the global consumer marketing and Internet officer for Citibank, which commissioned the poll.

“As people do their best to keep even, they continue to hope and expect that, over the longer term, the economy will improve and they will be able to advance,” Peluso added in a statement.

Respondents to the survey, conducted by Hart Research Associates, were split as to whether local business conditions would improve, with 51% believing they would, which is 12% less than in January.

More than 60% thought their own financial situation would get better in the next year, down seven percentage points from the number who felt that way three months ago.

Another April 20-23 Gallup survey of 1,013 US adults found that “only 27% said the economy is growing; 29% said the economy is in a depression and 26% in a recession, with another 16% saying it is “slowing down”.

The health of the US economy is expected to be a major issue as President Barack Obama, a Democrat, seeks re-election in 2012.

The Gallup poll found that supporters of the ruling Democrats are the most likely to say the economy is growing. However 43% said the economy is in a recession or depression, 13% said it is slowing down and 42% said it is growing. A majority of opposition Republicans, 68%, said the US economy is in a recession or a depression with only 14% saying the economy is growing.

Meanwhile the independent voters, crucial segment of the electorate for Obama’s re-election are divided between 57% who said the economy is in a recession or depression and 24% said it is growing.