Bernanke: Economy weakening, Fed ready to help

WASHINGTON -- The U.S. economy has weakened and the Federal Reserve is ready to take further action to bolster growth if conditions don't improve, Chairman Ben Bernanke told a congressional panel Tuesday. But Bernanke provided no clues about what steps the Fed might take or whether any action was imminent.

Investors were hoping Bernanke would signal the Fed was ready to launch another round of bond purchases, which aim to drive down long-term interest rates and encourage more borrowing and spending.

Bernanke is delivering his midyear report on the economy to the Senate Banking Committee. He'll testify Wednesday before the House Financial Services Committee.

His report comes as job growth has slumped, manufacturing has weakened and consumers have grown more cautious about spending.

Bernanke acknowledged those developments in his testimony. He noted that the economy, after growing at an annual rate of 2.5 percent in the second half of 2011, slowed to roughly 2 percent in the first three months of this year and likely slowed further in the April-June period.

The economy will likely continue to expand moderately, he said. But the meager growth would slow further if Europe's debt crisis worsens or if Congress doesn't address an impending budget crisis before the end of the year.