Housing.com News, Analysis & Opinion: Credit & Debt: Bernanke: "The Economic Expansion Continues"

Even so, Bernanke stuck with the Federal Reserve's assessment that the economy is likely to grow at a moderate pace over the coming quarters. He also repeated the Fed's belief that inflation also should ease in the months ahead, but he warned that underlying inflation remains "uncomfortably high."...On the other hand, consumers, who proved "quite resilient" despite the housing slump and increases in energy prices, could continue to keep spending at a pace that would make the economy grow faster than currently expected, he said. And, there are other forces, including a still-good jobs market that is producing fatter paychecks, that could push up inflation.

Bernanke's formal comment on his hopes for consumer spending from his testimony:

The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending, which increased at a brisk pace during the second half of last year and has continued to be well maintained so far this year. Growth in consumer spending should continue to support the economic expansion in coming quarters.

"Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions. The recent turmoil in financial markets coupled with the run-up in gasoline prices may have contributed to consumers' heightened sense of uncertainty and concern. The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial."

The key phrase there is "diminishing expectations." People are realizing that the housing market is crumbling, that their paychecks are stretched to the max, and that they have no savings cushion if an emergency strikes. These are not the hallmarks of a bull psychology by any stretch. Bernanke better bet on something else to keep his helicopter blades spinning.

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It seems that on Ben Bernanke's world, the interest rate is still 4%, home sales are on a permanent upward trend, and any damage you may have seen from the subprime implosion is nothing to worry about: Even so, Bernanke stuck with the Federal Reserve's assessment that the economy is likely to grow at a moderate pace over the coming quarters. He also repeated the Fed's belief that inflation also should ease in the months ahead, but he warned that underlying inflation remains "uncomfortably high."...On the other hand, consumers, who proved "quite resilient" despite the housing slump and increases in energy prices, could continue to keep spending at a pace that would make the economy grow faster than currently expected, he said. And, there are other forces, including a still-good jobs market that is producing fatter paychecks, that could push up inflation. Bernanke's formal comment on his hopes for consumer spending from his testimony: The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending, which increased at a brisk pace during the second half of last year and has continued to be well maintained so far this year. Growth in consumer spending should continue to support the economic expansion in coming quarters. And just how is that working out?: "Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions. The recent turmoil in financial markets coupled with the run-up in gasoline prices may have contributed to consumers' heightened sense of uncertainty and concern. The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial." The key phrase there is "diminishing expectations." People are realizing that the housing market is crumbling, that their paychecks are stretched to the max, and that they have no savings cushion if an emergency strikes. These are not the hallmarks of a bull psychology by any stretch. Bernanke better bet on something else to keep his helicopter blades spinning.