Economic Stimulus Gains Traction; Bernanke Offers Limited Support for New Spending
An effort to boost the economy with a massive injection of public funds gained momentum yesterday, as Federal Reserve Chairman Ben S. Bernanke tentatively endorsed the idea of a new stimulus package and the Bush administration softened its opposition.</br></br>The remarks by the nation's economist in chief were a boon for congressional Democrats, who have argued for weeks that the government should authorize billions of dollars in additional spending. But Bernanke, who generally resists inserting himself into political debates, made clear that any new package must be narrowly focused to quickly provide a shot of relief to the economy.</br></br>Even though the government has taken dramatic steps to prop up financial firms in recent weeks, the underlying shape of that economy is looking worse, according to a slew of new data.</br></br>The economy is likely to be weak "for several quarters," Bernanke told the House Budget Committee, and there is "some risk of a protracted slowdown." For that reason, he said, "consideration of a fiscal package by the Congress at this juncture seems appropriate."</br></br>The stock market soared in response to Bernanke's remarks, as well as to signs of healing in the troubled credit markets. The Dow Jones industrial average was up 413 points, or 4.7 percent.