Bernanke Focuses on Inflation Issues

July 16, 2008 12:00:00 AM PDT
The economy is once again the top subject on Capitol Hill this Midday as the Federal Reserve chair is back to answer questions... this time about inflation. The message from the Federal Reserve chair was no different Wednesday. "The economy continues to face numerous difficulties, including ongoing strains in financial markets," said Ben Bernanke.

On Tuesday the Fed Chairman warned of inflation risks. Wednesday, the government reported that inflation increased at its fastest rate in 16 years. And while democrats are talking about another stimulus package for the middle class, everyone is vulnerable.

Beth-Ann Bovino, Senior Economist, Standard & Poor's said, "Bernanke made it clear that inflation is certainly is an issue and something that the Fed is watching but it does look like they're more focused on the downside risk to growth, given his recent talk."

And since money talks; all the chatter now is about the 90 names on the FDIC list of troubled banks. "But here's the thing to keep in perspective. A decade ago back in 1994 there were 575 troubled banks. This is a normal part of the business cycle and the economic cycle in this country and I feel that we are sparking some fears here that may lead people to do things that would then lead the banks to fail," said ABC News Financial Contributor Mellody Hobson.

One silver lining showed up yesterday in the form of a red arrow when the weak economy caused oil to take an unexpected dip, down nearly 5%... the biggest one-day drop in 17 years.

The latest ABC News survey shows consumer confidence is at the lowest level in 27 years. And more bad news may be on the way as more banks report their earnings later this week


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