US fiscal trajectory unsustainable, says US official

February 3rd, 2012 - 11:33 am ICT by IANS  

Washington, Feb 3 (IANS/EFE) The growth of government debt relative to US gross domestic product is “clearly unsustainable”, Federal Reserve Chairman Ben Bernanke said here Thursday in congressional testimony.

“To achieve economic and financial stability, US fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time,” he told members of the House Budget Committee.

Appraising the current state of the economy, Bernanke said that while “conditions have certainly improved … the pace of the recovery has been frustratingly slow, particularly from the perspective of the millions of workers who remain unemployed or underemployed”.

The Fed chief also cited possible risks to the global economy from the slowdown in Europe and the ongoing euro-zone debt crisis.

“We are in frequent contact with European authorities, and we will continue to monitor the situation closely and take every available step to protect the US financial system and the economy,” he said, responding to lawmakers’ concerns about possible contagion from Europe’s woes.

The US will run a budget deficit of $1.1 trillion this year, equivalent to 7 percent of GDP, according to estimates from the non-partisan Congressional Budget Office.


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