WASHINGTON, Nov. 8 Ben S. Bernanke, chairman of the Federal Reserve, told Congress today that the economy is going to get worse before it gets better, a message that got a chilly reception from both Wall Street and politicians. On a day when stock prices swung wildly, the dollar hit another new low against the euro and further signs emerged that consumers are growing more cautious about spending, Mr. Bernanke warned that the economy is about to slow noticeably as the housing market continues to spiral downward and financial institutions tighten up on lending.
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Mr. Bernanke offered a rocky outlook for the months ahead. He said that the battered housing market had yet to hit bottom, that delinquencies and foreclosures were likely to rise and that the downturn in home building was likely to intensify. He predicted that personal spending would advance more slowly, because consumers are less confident and because of tighter credit conditions. On top of all that, he said, further sharp increases in crude oil prices have put renewed upward pressure on inflation and may impose further restraint on economic activity. Oil traded above $95 a barrel today, but the price was down slightly from the day before but still near its recent record highs.
Source: NY Times