Recovery May Not Last, Bernanke Warns

(Video: CNBC • Story: CBC News)



It’s too soon to declare that the nascent economic recovery will last, Federal Reserve chairman Ben Bernanke warned Monday. “We still have some way to go before we can be assured that the recovery will be self-sustaining,” Bernanke said a speech to the Economic Club in Washington, D.C.

The Fed chief repeated his belief that the recovery will continue at least into next year. But he warned that “formidable headwinds” such as a weak job market, cautious consumers and still-tight credit threaten an American economy that grew at an annual rate of 2.8% in the third quarter of 2009. Those forces “seem likely to keep the pace of expansion moderate,” he said. Economists worry that the recovery in the world’s largest economy could fizzle in the latter part of 2010 as government stimulus fades.

The U.S. economy is closely watched in Canada because the latter’s economy is heavily dependent on a healthy American market for its natural resources, services or manufactured goods exports. Although Canada entered recession several months after the United States and its key financial services and real estate sectors have both held up comparatively well, both countries are dealing with high unemployment and added government spending calculated to soften the blow and restore consumer and business confidence. Read more here.