Bernanke mindful economy may need boost

Federal Reserve Chairman Ben Bernanke told lawmakers Wednesday that the Fed is ready to act if the economy gets weaker.

He warned them that allowing the nation to default on its debt would send "shock waves through the entire financial system."

Underscoring how fragile the economy remains two years after the Great Recession, Bernanke laid out three new steps the Fed could take, including a fresh round of government bond purchases designed to stimulate economic growth.

"We have to keep all the options on the table. We don't know where the economy is going to go," Bernanke told the House Financial Services Committee.

The Fed chairman stopped short of promising anything, but Wall Street appeared comforted that the central bank was poised to act.

The Dow Jones industrial average was up more than 150 points during his testimony to Congress, and closed up nearly 45 points.

The nation was creating about 200,000 jobs a month this spring.

But hiring slowed almost to a standstill in June, with 18,000 new jobs. It takes about 125,000 a month just to keep up with population growth.

Moody's Investors Service threatened Wednesday to lower the United States' credit rating, saying there is a small but rising risk of default.

Economists have warned that the credit system would tighten, not unlike the worst days of the 2008 financial crisis.

-- AP