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For hiring to strengthen enough to lower the unemployment rate to a more normal level of between 5.5 percent and 6 percent, companies must gain more confidence in the economy. But some may be hesitant to add workers because of concerns of deep federal spending cuts and tax increases. Federal Reserve Chairman Ben Bernanke told a congressional committee Wednesday that the job market is improving, but that higher taxes and government spending cuts likely will slow economic growth this year. Bernanke said it was too early for the Fed to abandon its extraordinary efforts to boost economic growth. The Fed says it plans to keep its short-term interest rates near zero until unemployment is below 6.5 percent. And it is buying $85 billion a month in Treasury and mortgage bonds to push down longer-term interest rates. The Fed's low interest-rate policies are intended to encourage more borrowing and spending, which boosts economic growth.
[Associated
Press;
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