EconomicCrisis.US

Federal Reserve Chairman Ben Bernanke told a panel examining the U.S. financial crisis that he had no options to prevent Lehman Brothers’ failure in September 2008 even though he knew its downfall would be “catastrophic” to the financial system and economy.

The Lehman failure set off severe market turmoil, spurring debate about whether the government should have done more at the time to halt the investment bank’s collapse. Speaking to the Financial Crisis Inquiry Commission on Thursday, Mr. Bernanke said legal and practical considerations prevented taking action, even though “I never at any time wavered in my view that we should do absolutely everything possible to prevent the failure of Lehman.”
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New claims for jobless benefits in the US fell last week but still remain above the level economists have said is necessary to create jobs.

Initial jobless claims fell by 6,000 to 472,000, labour department figures showed on Thursday. Economists had expected claims to fall to 470,000 from the 473,000 level originally reported the prior week, which was revised to 478,000 on Thursday. The less volatile four-week average also declined, falling back 2,500 to 485,500.

The data “underscore that the labour market remains very weak. The claims numbers continue to be at higher levels than you would expect given the payroll results”, said Joshua Shapiro, chief US economist at MFR. “I don’t see the overall economy growing.”
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U.S. consumer confidence unexpectedly rose to 53.5 in August, the Conference Board said, as Americans became somewhat more positive about the short-term outlook for the economy.

A Bloomberg survey had expected the index to rise to 51.0 in August from 50.4 in July. It hit a record low of 25.3 in April 2009.

In August, two of the index’s three components rose, with consumers’ expectations for both the job market and the future economic conditions showing improvement.

Consumers expecting more jobs in the months ahead rose in August to 14.6% from 14.2% in July, while those anticipating fewer jobs decreased to 19.4% from 20.9%.
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The estimated rise in gross domestic product, the value of goods and services produced, for the period between April and June was revised down from 2.4pc to just 1.6pc, as companies reined in inventories and the trade deficit widened.

The revision – despite beating economists’ estimates of a 1.4pc rise – would appear to provide further evidence that the recovery is losing steam.

The US economy enjoyed a 3.7pc expansion in the first quarter.

The cut in growth stemmed from mainly from a “sharp acceleration in imports and sharp deceleration in private inventory investment,” the department said.
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