THE American economic recovery will be "moderately stronger" this year than last, but it is likely to take up to five years for the jobs market to recover, Ben Bernanke, the chairman of the Federal Reserve said yesterday.
His comments came as it was disclosed that fewer jobs were created last month than had been expected. Figures published yesterday showed that American employers added 103,000 new jobs in December -- the second consecutive disappointing month that suggested a slowdown in layoffs rather than a material pick-up in hiring.
In his first testimony to the new Congress, Mr Bernanke said that he had seen increased evidence that "a self-sustaining recovery in consumer and business spending may be taking hold".
But he showed no signs of being ready to scale down the Fed's controversial $600bn bond-buying programme that started in November, noting that employment had improved only modestly at best.
He also urged members of the Senate Budget Committee to put in place a credible programme to lower the federal budget deficit, saying the government was on "an unsustainable fiscal path" that could lead to financial disaster.
Figures from the US Bureau of Labour Statistics also showed a 0.4 percentage point fall in the unemployment rate from 9.8 to 9.4pc -- the lowest level since May 2009. But many analysts noted that this may just be a temporary dip, since much of the fall was attributed to an increase in the number of people who have simply given up looking for work and so are no longer counted an unemployed, even though they are jobless.
Even at an 18-month low of 9.4pc, the unemployment rate is still roughly double what it was before the recession.
The new job figures, which were well below the 150,000 to 175,000 expected by analysts, came as a cold shower after a string of promising economic data in recent weeks and figures from the payrolls processing company ADP earlier this week suggesting that private employers added 297,000 in December in the largest gain since 2000.
The figures are also likely to be a huge disappointment to the Obama administration. Mr Obama recently held a string of meetings with chief executives to discover what might persuade them to step up staffing levels. American companies are sitting on piles of cash, which, it seems, they are spending on everything -- dividends, acquisitions, share buybacks -- except hiring.
Dan Greenhaus, chief economic strategist at Miller Tabak & Co, said the most troublesome data showed that people unemployed for six months or more now made up more than 44pc of the whole.
Paul Dales, senior US economist at Capital Economics, said that while labour market conditions may improve in the first half of this year as activity is boosted by the second fiscal stimulus, that boost would fade later in the year.
"Overall, the US economy is still not creating enough jobs to generate a sustained and meaningful fall in the unemployment rate," he said.