By Pedro Nicolaci da Costa
WASHINGTON, March 22 U.S. consumer spending is
still too weak to ensure a healthy pace of economic growth,
Federal Reserve Chairman Ben Bernanke said on Th ursday.
"Right now, in terms of debt and consumption, we're still
way low relative to the pattern before the crisis," Bernanke
told students in the second of two lectures at The George
Washington University. "We lack a source of demand to keep the
The U.S. economy grew 3 percent in the fourth quarter of
2011 but that rate was seen slowing to just under 2 percent in
the first three months of this year. Consumer spending accounts
for over 70 percent of total output in the world's largest
Much of Bernanke's lecture focused on the build-up of the
housing bubble and the failures that preceded the financial
crisis of 2007-2008. The Fed Chairman acknowledged regulators,
including the central bank itself, had fallen down on the job,
particularly with regards to esoteric Wall Street securities and
"Where there were authorities and powers, they weren't
always effectively used, and that obviously led to some
weaknesses," he said.
Although Bernanke has been highly visible this week, jumping
between congressional testimonies and his lectures to students,
he has not shed additional light on what investors are primarily
concerned with - the prospect for further monetary easing.
Analysts now see a third round of bond purchases or
quantitative easing as less likely given recent improvement in
the economic backdrop, especially in the job market.
Still, Fed officials including Bernanke have made clear they
still see the 8.3 percent unemployment rate as too high for
comfort, and that the risk of contagion from Europe's financial
crisis, while smaller, has not completely abated.
In response to the deepest recession in generations, the
Fed, under Bernanke's leadership, slashed short-term borrowing
costs to zero and have promised to leave them there until at
least late 2014. The central bank has also sharply expanded its
balance sheet through the purchase of some $2.3 trillion in
Treasury bonds and mortgage-backed debt.