Bernanke: Growth to continue, but U.S. must tackle debt

By Jeanne Sahadi, senior writerJune 9, 2010: 10:28 AM ET

NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke told lawmakers on Wednesday that the effects of the European debt crisis on the U.S. economy are likely to be moderate if markets continue to stabilize in the wake of the austerity measures announced by Eurozone countries.

But even if they do, the United States still has to make plans now to bring its own debt issues into line.

"To avoid sharp, disruptive shifts in spending programs and tax policies in the future, and to retain the confidence of the public and the markets, we should be planning now how we will meet these looming budgetary challenges," Bernanke told the House Budget Committee.

More broadly, Bernanke said that while there are still a number of restraints on economic recovery in the United States -- such as continued pressure on state and local budgets -- and even as fiscal stimulus begins to wane , the economy is still poised to continue its recovery.

"Although the support to economic growth from fiscal policy is likely to diminish in the coming year, the incoming data suggest that gains in private final demand will sustain the recovery in economic activity."

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