WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Congress on Wednesday that the U.S. economy may shrink slightly over the first half of this year, saying "a recession is possible." Yet, he did not offer any assurances of further interest rate cuts.
Bernanke's testimony to the Joint Economic Committee was a much more pessimistic assessment of the economy's immediate prospects amid a trio of crises — housing, credit and financial.
"It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States's economic health. Under one rule, six straight months of declining GDP would constitute a recession.
Of course, Bernanke said that the U.S. economy may shrink slightly over the first half of this year meaning that by mid-summer the economy will be happily expanding again--just in time for the November presidential election! All the subprime mortgage mess, the housing foreclosures, and the financial industry meltdowns will all disappear just as the general election is starting up, and Americans will happy to vote a Republican into the White House again, just to keep the economic good times rolling.
I guess someone has been taking his happy pills today.
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