US Federal Reserve chief Ben Bernanke has said more government spending may be needed to combat economic weakness. A fresh round of stimulus would be a good idea, he told the US House of Representatives budget committee.
This is the first time Mr Bernanke has supported such extra spending - something that President George W Bush has not been keen on. "Consideration of a fiscal package by the Congress at this juncture seems appropriate," said Mr Bernanke.A series of crises in the housing, credit and financial sectors have badly hit the US economy.
Many analysts are forecasting the US economy will shrink later this year and early next year. This would meet the classic definition of a recession - which is two quarters of negative growth. However, some economists believe the economy is already in a recession.
Any government spending would need to kick in quickly to encourage people and businesses to boost spending and help the economy during the period in which economic activity would be otherwise weak, he said. The Federal Reserve chairman also said the package should include provisions that would aid the jammed credit markets, which has been a major factor in the economy's slowdown.
"If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," he said. "Such actions might be particularly effective at promoting economic growth and job creation," he added
