The jobs picture is disappointing but the economic recovery is moving at a "modest pace," Federal Reserve Chairman Ben Bernanke said this morning after the government revised downward its figures for growth of U.S. goods and services in the second quarter.
But the second-quarter revision of gross domestic product to 1.6 percent from 2.4 percent is not quite as bad as economists expected. Bernanke, speaking at the Kansas City Federal Reserve Symposium in Jackson Hole, Wyoming, acknowledged "the task of economic recovery and repair remains far from complete."
The Fed is ready to step up its efforts if the economy deteriorates, he said. It will also be vigilant looking for deflationary signs. Falling prices are generally a bad sign for the economy, leading to lower investment and layoffs by corporations.
The jobs picture, which appears to be improving with a small decline in the unemployment rate, is attributable more to reduced labor force participation than to job creation, he said. Initial claims for unemployment insurance remain high. The recovery of output and employment has slowed in recent months, to a pace weaker than projected earlier this year.
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