Bernanke: Recession likely if Congress doesn't act [View all]

[Omaha Steve]

Source: AP-Excite

By MARTIN CRUTSINGER

WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke sketched a bleak picture of the U.S. economy Tuesday - and warned it will darken further if Congress doesn't reach agreement soon to avert a budget crisis.

Without an agreement, tax increases and deep spending cuts would take effect at year's end. Bernanke noted what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013.

The Fed is prepared to take further action to try to help the economy if unemployment stays high, he said. Bernanke didn't signal what steps the Fed might take or whether any action was imminent. And he noted there's only so much the Fed can do.

But the Fed chairman made clear his most urgent concern is what would happen to the economy if Congress can't resolve its budget impasse before the year ends.

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Read more: http://apnews.excite.com/article/20120717/DA02U2281.html

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Federal Reserve Board Chairman Ben Bernanke pauses as he arrives to give a semiannual report to the Senate Banking Committee, Tuesday, July 17, 2012, on Capitol Hill in Washington. Bernanke's testimony comes as job growth has slumped, manufacturing has weakened and consumers have grown more cautious about spending (AP Photo/Carolyn Kaster)