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Bernanke: 2 Percentage Points of Unemployment Cyclical

July 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said about 2 percentage points of the unemployment rate is related to weak demand in the economy, in response to a question during his semiannual testimony before the House Financial Services Committee.

“Probably about 2 percentage points or so -- say the difference between 7.6 and 5.6 is cyclical,” Bernanke said in response to a question from Spencer Bachus, an Alabama Republican. The jobless rate last month was 7.6 percent.

“We don’t see much evidence that the structural component of unemployment has increased very much during this period,” Bernanke said. “It is something we have been worried about because with people unemployed for a year, two years, or three years, they lose their skills, they lose their attachment to the labor market, and the concern is they will become unemployable.”

“So far it still appears to us that we, the country, can obtain an unemployment rate somewhere in the” 5 percent range, he said.

To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net;

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

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