ANN ARBOR -- Federal Reserve Chairman Ben Bernanke said today that he believes the U.S. economy is "moving in the right direction and I'm cautiously optimistic about the next few years."
During a one-hour public chat at the University of Michigan's Rackham Auditorium, the Fed chairman said recent efforts to avoid the so-called "fiscal cliff," a series of automatic spending cuts and tax increases, were sufficient to avoid putting the country's fragile economy back into recession.
But Mr. Bernanke, Fed chairman since 2006, added, "We are not out of the woods."
Mr. Bernanke discussed a variety of economy-related subjects during a question-and-answer session sponsored by the university's Gerald R. Ford School of Public Policy. He discussed the fiscal cliff, the country's deficit problems, the looming sequester cuts, and an expected fight over the debt ceiling.
The Fed chairman said while all of those problems will challenge America over the next few decades, in the short term the debt ceiling fight has the potential to harm the fragile economy.
The last time a debt ceiling crisis arose (summer 2011), Congress allowed the situation to get out of hand and the country's credit rating was downgraded as a result.
Mr. Bernanke likened that situation to a family in debt who resolves their situation by electing not to pay their credit card bills.
"It is very important for Congress to avoid a situation where the government doesn't pay its bills," he said.
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