The United States must get its trillion-dollar deficit under control or face the consequences, Federal Reserve chairman Ben Bernanke warned Monday.
Federal Reserve chairman Ben Bernanke warns the U.S. must get its federal deficit under control. (Jose Luis Magana/Associated Press) In remarks to a Federal Reserve conference in California, Bernanke called for the U.S. to whittle down its record budget deficits or risk seeing its economy collapse from unsustainable government spending.
He also called for countries such as China to get their consumers to spend more, another move that would help combat skewed global trade and investment flows that contributed to the financial crisis.
On Friday, Washington reported a $1.42 trillion US deficit for the 2009 budget year that ended Sept. 30. The figure is more than triple the previous year's $459 billion deficit.
In September alone, the United States posted a budget deficit of $46.6 billion. By contrast, the Canadian government posted a deficit of $5.8 billion for the year ended March 31, 2009, and is forecasting a $56 billion shortfall in the current fiscal year.
Trade imbalances
The Federal Reserve chief's comments echo pledges made by leaders of the Group of 20 nations at their summit in Pittsburgh last month.
"As the global economy recovers and trade volumes rebound, however, global imbalances my reassert themselves," Bernanke warned.
For the United States's part, "the most effective way" to boost national savings "is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time," Bernanke said in prepared remarks. He didn't suggest ways to do so.
Trade surplus countries like China and most Asian economies need to get their consumers to spend more and rely less on export-led growth, Bernanke said.
"In large part, such action should focus on boosting consumption," Bernanke said.
With files from The Associated Press
