House Financial Services Committee ranking member Rep. Barney Frank (D-MA) (L) holds up a copy of 'The Semiannual Monetary Policy Report to the Congress' during a hearing with committee Chairman Spencer Bachus (R-AL)on Capitol Hill July 18, 2012 in Washington, DC. This was Fed Chairman Ben Bernanke's second time in as many days to appear before Congress to answer questions about the report. (Photo by Chip Somodevilla/Getty Images)
WASHINGTON (AP) - Chairman Ben Bernanke told lawmakers Wednesday that the Federal Reserve's efforts to bolster growth have helped lift the U.S. economy out of the Great Recession. But he acknowledged that growth remains weak and the Fed can only do so much.
"I don't think it is the case that there has been no progress. The recovery has been slower than we like but clearly we have made progress," Bernanke told the House Financial Services Committee.
Bernanke was on the Hill to deliver his twice-a-year report to Congress on the state of the economy. But he spent part of the hearing defending the Fed's previous two rounds of large-scale bond purchases against Republican criticism.
The economy has weakened since the start of the year, and Bernanke said the Fed is prepared to take further action if unemployment stays high. He didn't specify what steps the Fed might take or whether any action was imminent.
His comments were similar to those he made Tuesday to the Senate Banking Committee on Tuesday.
Many economists interpreted the remarks to mean the Fed will likely launch a third round of bond purchases, perhaps in the fall. That's because few expect the unemployment rate, which was 8.2 percent last month, to fall much further by then.
The bond purchases seek to lower long-term interest rates and encourage more borrowing and spending.
Bernanke noted that the economy, after growing at a 2.5 percent annual rate in the second half of 2011, slowed to roughly 2 percent from January through March. And it likely weakened further in the April-June period.
Manufacturing has slowed. Consumers are spending less. And job growth has slumped to an average of 75,000 a month in the April-June quarter from 226,000 a month from January through March.
But Republicans on the panel questioned the Fed's use of large-scale asset purchases to lower long-term interest rates. They say the bond purchases have increased the risk of inflation without providing much help to the slumping economy.
"We have anemic growth, probably half of what it should be by historic standards," said Rep. Jeb Hensarling, R-Texas. Hensarling questioned what another round of bond purchases would do.
Bernanke said the first effort in the middle of 2009 helped lift the economy out of the recession, which ended in June 2009.
The second, launched in Nov. 2010, kept the economy from suffering a bout of deflation, he said. Deflation is a prolonged period of falling prices which the United States hasn't seen since the Great Depression.
"I think the previous efforts did have productive effects," he said.