Fed Chairman: Economy, State Governments Continue to Face Challenges
The U.S. economy—while growing at a moderate pace—still has a "considerable way to go to achieve a full recovery," said Federal Reserve Chairman Ben Bernanke during an Aug. 2 speech in Charleston, S.C.
Speaking at the annual meeting of the Southern Legislative Conference, Bernanke noted that some sectors of the economy, such as manufacturing and business investment in equipment and software, have gained steam. However, many Americans are still burdened by high unemployment, foreclosures, and diminished savings, he added.
State budget issues weigh on economic growth
While fiscal pressures should ease somewhat as economic activity picks up, state legislatures will still face longer-term issues related to mounting pension liabilities and the rapidly increasing cost of health benefits. Further, "with economic conditions still far from normal, state budgets will probably remain under substantial pressure for a while, leaving governors and legislatures a difficult juggling act," he added.
Bernanke urges constructive solutions, investments in education
Additionally, Bernanke urged legislators to avoid across-the-board cuts in existing state programs, suggesting that they instead "be willing to make significant changes to deliver necessary services at a lower cost."
August 31, 2010