The U.S. economy is now in its seventh quarter of expansion, but job growth remains relatively weak and the unemployment rate is still high, U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday.
"Last quarter, for the first time in this expansion, our nation 's real gross domestic product (GDP) matched its pre-crisis peak," Bernanke said in a testimony before the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate to present the Fed's semiannual Monetary Policy Report.
"More recently, we have seen increased evidence that a self- sustaining recovery in consumer and business spending may be taking hold," he added.
The central bank chief contended that the real consumer spending in the nation has grown "at a solid pace" since last fall, and business investment in new equipment and software has continued to expand.
U.S. economic growth was revised downward to an annual rate of 2.8 percent in the fourth quarter of 2010, compared with the estimated pace of 3.2 percent in January, according to a report released by the Commerce Department last week.
Real GDP, the overall economic activity, grew 2.8 percent in 2010 year on year, after declining by 2.6 percent in 2009, when the economy was hit by the worst downturn in decades.
The Federal Open Market Committee (FOMC), the interest rate policy making body of the central bank said in an updated forecast that they think the economy will grow between 3.4 percent and 3.9 percent in 2011. That's an upward revision from their November forecast, which predicted that gross domestic product will grow 3 percent to 3.6 percent.
As for the widely watched job market, the Fed predicted the unemployment rate would be stuck at around 8.8 to 9.0 percent this year. By the time of the 2012 presidential elections, the Fed predicted unemployment would be 7.6 to 8.1 percent.
Unemployment rate, now at 9 percent, dropped 0.4 percentage points from December 2010.
Bernanke says the sharp drops in the nation's unemployment rates over the last two months were encouraging. But he said it will still take "several years" for unemployment to drop back to normal -- around 6 percent.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," he said.
