Fed chair: Unemployment rate will take years to drop, deficit ‘unsustainable’
Washington, DC, United States (AHN) – Federal Reserve chief Ben Bernanke says the unemployment rate in the United States will not drop to pre-financial crisis levels for a number of years.
Bernanke made that statement Thursday in answer to questions about the economy from the Congressional Committee on the Budget.
In addition, he said that it was impossible to consider the economic recovery to be established until there is a strong and sustained creation of jobs.
The U.S. economy only created 36,000 net jobs in January. That was not sufficient to cover population growth and did little to help the millions of people who lost their jobs during the recession or in its aftermath. For example, the economy needs to create from 120,000 to 200,000 jobs monthly just to absorb new workers entering the labor force for the first time.
Moreover, Bernanke said that the long-term challenges presented by the high federal deficit were “daunting” and that the present high deficit was “unsustainable.”
The total government debt is now 60 percent of gross domestic product (GDP) and forecast to rise to 150 percent of GDP by 2030. The total federal budget deficit is 9 percent of current GDP.
By contrast, European Union nations try to keep budget deficits to 3 percent of GDP.
GDP is the total amount of goods and services consumed in the nation. The budget deficit is the amount the government spends each year in excess of its income, expressed as a percentage of the national GDP.
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