The U.S. unemployment rate still remains too high despite recent economic recovery signs, Federal Reserve Chairman Ben Bernanke said on Wednesday.
The Fed chief said in a testimony to the Budget Committee of the U.S. House of Representatives that a decline in the unemployment rate during the past two months was encouraging, but it would take several years for hiring to return to normal levels.
Bernanke's remarks largely echoed a speech he delivered last week at the National Press Club.
The U.S. unemployment rate dropped to 9 percent in January, the lowest level in nearly two years and 0.4 percentage points lower than in December 2010. In December 2010, the unemployment rate fell to 9.4 percent from 9.8 percent the month before.
However, the nonfarm payroll increased by only 36,000 last month in the United States, the least in four months and far less than the 145,000 increase that economists had expected.
"The economic recovery that began in the middle of 2009 appears to have strengthened in the past few months, although the unemployment rate remains high. But economic growth slowed significantly last spring and concerns about the durability of the recovery intensified as the impetus from inventory building and fiscal stimulus diminished and as Europe's fiscal and banking problems roiled global financial markets," Bernanke noted.
He held that although indicators of U.S. spending and production have been encouraging on balance, the nation's job market had improved "only slowly." Following the loss of more than 8 million jobs from 2008 through 2009, private-sector employment expanded by a little more than 1 million in 2010.
"Inflation is expected to persist below the levels that Federal Reserve policy makers have judged to be consistent over the longer term with our statutory mandate to foster maximum employment and price stability," the Fed chief said during his first appearance on the Capitol Hill after Republicans took control of the House.
Bernanke believed that the U.S. fiscal position had deteriorated since the onset of the financial crisis and the recession, largely due to the effects of the weak economy on revenues and outlays.
"Sustained high rates of government borrowing would both drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living. Moreover, diminishing investor confidence that deficits will be brought under control would ultimately lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil," he warned.