Bernanke Says Failure to Raise Debt Limit Will Cause Job Losses

Federal Reserve Chairman Ben S. Bernanke said the economy may be thrown into reverse and employers would start cutting jobs if Congress fails to raise the nation’s legal borrowing authority.

The Fed chief said today it was “conceivable” that the economy could shrink for two straight quarters, a rough rule of thumb for a recession. Bernanke also said he was “quite certain” that the economy would lose jobs. He didn’t say how many jobs could be lost.

Bernanke made his comments today at a House Financial Services Committee hearing. Congress and President Barack Obama face an Aug. 2 deadline for boosting the nation’s $14.3 trillion debt ceiling, or risk that the federal government would default on its bills.

To contact the reporter on this story: Jeannine Aversa in Washington at javersa@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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