US releases stimulus funds

March 4th, 2009 - 5:01 am ICT by IANS  

Barack ObamaWashington, March 4 (DPA) US Federal Reserve Chairman Ben Bernanke Tuesday warned there was “considerable uncertainty” over how quickly the United States can recover from a deep recession, even as funds from a massive government stimulus package were being released into the economy.
While President Barack Obama announced that new infrastructure projects would begin Tuesday and help spur job growth, Bernanke told a Senate hearing that it was difficult to measure the impact of Obama’s $787-billion plan.

“The timing and the magnitude of the macroeconomic effects of the fiscal program are subject to considerable uncertainty, reflecting both the state of economic knowledge and the unusual economic circumstances that we face,” Bernanke told the Senate Budget Committee.

The Obama administration is counting on the recovery package, which was approved two weeks ago, to save or create 3.5 million jobs. The US economy contracted 6.2 percent in the fourth quarter of 2008 and has shed more than 3.6 million jobs since a recession began in December 2007.

Bernanke said the stimulus should provide some “boost to demand” over the next two years, but he warned that stabilizing the US financial system was the only path to long-term recovery.

The Fed and Treasury earlier Tuesday launched a new $1-trillion programme to revive lending for small businesses, cars, credit cards and university tuition. The freeze in credit availability lies at the heart of the US economic crisis.

Obama said the government was releasing $28 billion from the stimulus package related to highway investments, which could help create 150,000 new jobs. The first construction project would begin Tuesday in Maryland.

“We are going to start creating jobs again,” Obama said after a meeting at the White House with British Prime Minister Gordon Brown.

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