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US economy 'not yet out of woods': Fed chief

business Updated: Apr 08, 2010 12:47 IST

IANS
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The US economy seems to be recovering but it is "far from being out of the woods," Federal Reserve Chairman Ben Bernanke said on Wednesday.

In prepared remarks to business people in Dallas, Bernanke said that the financial crisis, the worst one since the Great Depression of 1930s, looks to "be mostly behind us."

"The economy seems to have stabilised and is beginning to grow again," he said. "But we are far from being out of the woods."

Many Americans are still grappling with unemployment or foreclosure, or both and cities and states are struggling to maintain essential services, said the Fed chief.

Although much of the financial system is functioning more or less normally, bank lending remains very weak, threatening the ability of small businesses to finance expansion and new hiring, Bernanke added.

In the speech, Bernanke said some of the toughest problems are in the job market.

"Although layoffs have eased in recent months, hiring remains very weak," said Bernanke, adding that more than 40 percent of the unemployed have been out of work six months or longer, nearly double the share of a year ago.

"I am particularly concerned about that statistic, because long spells of unemployment erode skills and lower the longer-term income and employment prospects of these workers," said the Fed chief.

The Federal Reserve announced March 16 to keep the federal funds rate at historic low level of zero to 0.25 percent for "an extended period" to boost the economic recovery.

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