WASHINGTON (The Blaze/AP) -- Chairman Ben Bernanke says the U.S. economy has weakened and the Federal Reserve is ready to take further action to bolster growth if conditions don't improve. However, Bernanke provided no clues about what steps the Fed might take or whether any action was imminent.
Needless to say, this will most likely drive stocks down today.
Investors were hoping Bernanke would signal that the Fed was ready to launch another round of bond purchases (quantitative easing, or money-printing), which aim to drive down long-term interest rates and encourage more borrowing and spending.
Bernanke, giving the Fed's midyear economic update to Congress, says the economy will likely continue to expand moderately. But he says the economy's meager growth would slow further if Europe's debt crisis worsens or if Congress doesn't address an impending budget crisis before the end of the year.
UPDATE -- As predicted, Bernanke's failure to promise further fed action has driven stocks down.
Bernanke's midyear report to Congress on the economy comes as job growth has slumped, manufacturing has weakened, and consumers have cut back on spending.
Bernanke acknowledged those trends. He noted that the economy, after growing at an annual rate of 2.5 percent in the second half of 2011, slowed to roughly 2 percent in the first three months of this year and likely weakened further in the April-June period.
The economy will likely continue to expand moderately, he said. But the meager growth would slow further if Europe's debt crisis worsens or if Congress doesn't address an impending budget crisis before the end of the year.
"Although declines in energy prices are now providing some support to consumers' purchasing power, households remain concerned about their employment and income prospects and their overall level of confidence remains relatively low," Bernanke said in his testimony.
UPDATE II -- As we note in our daily Market Recap, we incorrectly predicted stocks would close down because of Bernanke's comments (or lack thereof). Stocks did not close down because of the chairman of the Federal Reserve. In fact, they managed a rather successful rally.
The Associated Press contributed to this story. This story has been updated.