Fed chairman Ben Bernanke noted in his latest economic outlook before the Joint Economic Committee that business investment in equipment and software has continued to expand, and productivity gains in some industries have been impressive. Bernanke says, however, “it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped.”

Bernanke said recent revisions of government economic data show the recession as having been even deeper, and the recovery weaker, than previously estimated; indeed, by the second quarter of this year, aggregate output in the U.S. still had not returned to the level that it had attained before the crisis. Slow economic growth has in turn led to slow rates of increase in jobs and household incomes.

However, the incoming data suggest that other, more persistent factors also continue to restrain the pace of recovery. Consequently, the FOMC now expects a somewhat slower pace of economic growth over coming quarters than it did at the time of the June meeting, when Committee participants most recently submitted economic forecasts.

Bernanke noted that the FMOC will begin reinvesting principal payments on its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities rather than in longer-term Treasury securities. By helping to support mortgage markets, this action too should contribute to a stronger economic recovery. The Committee will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability.

To read the full text of Bernanke’s economic outlook testimony: click here.