A year after Lehman, Bernanke says recession likely over

September 16, 2009

U.S. Chairman of the Federal Reserve Ben Bernanke speaks about a year of economic turmoil at the Brookings Institution in Washington September 15, 2009. REUTERS/Jim Young    (UNITED STATES POLITICS BUSINESS)   By Caroline Valetkevitch
   NEW YORK, Sept 15 (Reuters) – A year after the Lehman Brothers collapse, Federal Reserve chief Ben Bernanke said on Tuesday the recession was likely over, while data supported hopes that recovery from the worst downturn in decades was advancing.
   But Bernanke said the recovery would be slow and it would take time to create jobs. Similar warnings came from the Bank of Canada and Bank of England, whose governor also said the bank could cut the interest rate it pays on commercial banks’ deposits. For more see [ID:nN1523355].
   The comments came exactly one year after the collapse of Lehman Brothers investment bank, an event that set off the U.S. economy’s worst recession since the 1930s and helped spark a global financial crisis.
   “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” Bernanke said after addressing a Brookings Institution conference. Fed officials meet next week to review their policy options.
   The U.S. Commerce Department said retail sales climbed 2.7 percent in August after declining 0.2 percent in July. It was the biggest monthly advance since January 2006 and well above expectations on Wall Street for a 2 percent increase.
   “Retail sales show the recovery is here. This wasn’t just autos, it wasn’t just gasoline. This was the U.S. consumer getting out of their foxhole,” said T.J. Marta, market strategist at Marta on the Markets in Scotch Plains, New Jersey. “This is indisputably a good number.”
   Readings on manufacturing in the New York region and on national producer prices also came in stronger than expected.
   Stocks in Europe and the United States rose after the retail data, with the benchmark Standard & Poor’s 500 index <.SPX> gaining 0.3 percent to end at 1,052.63, while U.S. Treasuries prices <US10YT=RR> fell, pulling benchmark yields back from two-month lows.
   The S&P is up about 55 percent since hitting 12-year lows in early March, but investors have been eager to see more definitive signs that the economy is getting better.
   In its monthly report, the Organization of Petroleum Exporting Countries, which left its world oil demand forecast for 2010 unchanged, also said a recovery will be slow and gradual, even though evidence shows the world economy should be improving.
   Crude oil prices in New York <CLV9> rose $2.07 to $70.93 a barrel.
   In Germany, the ZEW survey showed a smaller-than-expected improvement in the country’s investor morale.
   The ZEW’s expectations index for Germany rose to 57.7 from 56.1 in August, reaching its highest since April 2006, although economists had expected a bigger rise.
    Adding to the mostly upbeat comments on the economy in the United States, President Barack Obama told autoworkers the U.S. economy was on the mend. [ID:nN1549500]
   Even with signs of economic improvement, the rising U.S. unemployment rate has remained a top worry and autoworkers have been among the hardest hit by layoffs.
   The Bank of Canada’s deputy governor, meanwhile, said a smooth economic recovery in Canada is not yet assured and that the strength of the Canadian dollar is one factor that could derail a comeback. (Reporting by Reuters reporters worldwide; Editing by Dan Grebler) ((caroline.valetkevitch@thomsonreuters.com; Tel: +1 646 223 6393; Reuters Messaging: caroline.valetkevitch.reuters.com@reuters.net)) Keywords: FINANCIAL/ 
Tuesday, 15 September 2009 22:46:09RTRS [nN1576055 ] {C}ENDS

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