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WASHINGTON -- Federal Reserve Chairman Ben S. Bernanke maintained that the economy was continuing to grow at a moderate pace, despite the recent sharp deceleration in job growth and a slowdown in economic output in large part because of government spending cuts.
In remarks Thursday before the Congress' Joint Economic Committee, Bernanke noted the weakening of hiring this spring as job growth slowed to an average of 75,000 a month in April and May from 225,000 in the first three months of the year.
However, Bernanke said the slowing may have been exaggerated by issues related to the warm winter and the end of what he called a spurt of "catch-up hiring" on the part of employers who had eliminated payrolls aggressively during and just after the recession.
Moreover, Bernanke said that consumer spending has been "relatively well sustained" and that the recent declines in energy prices should help boost purchasing power, despite modest income growth. And even in the face of the deepening troubles in Europe, the Fed chairman said that demand for U.S. exports had held up well.
In his prepared statement, Bernanke offered no hints that the Fed was about to take additional action to spur growth. Upon questioning, he said he and his colleagues at their next policy meeting June 19 and 20 would have to weigh whether economic growth going forward "will be sufficient to achieve continued progress in the labor market."
Bernanke also repeated his concerns about the looming "fiscal cliff" -- certain federal tax cuts and spending reductions that are set to expire or kick in at the end of this year. Many analysts expect those changes will provide a big hit to the economy if Congress doesn't take steps to extend current programs and policies.
"Indeed, a severe tightening of fiscal policy at the beginning of next year that is built into current law...would, if allowed to occur, pose a significant threat to the recovery," he said in his prepared remarks.
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