Federal Reserve Chairman Ben S. Bernanke said the 8.3 percent rate of unemployment in January understates weakness in the U.S. labor market.
"It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work," Bernanke said Tuesday in response to questions at a hearing before the Senate Budget Committee in Washington. "There are also a lot of people who are either out of the labor force because they don't think they can find work" or in part-time jobs.
The jobless rate unexpectedly fell to 8.3 percent in January, a government report showed on Friday. Bernanke's remarks indicate that his view that the labor market is a "long way" from returning to normal hasn't changed since he used the same phrase when he testified to the House Budget Committee on Thursday.
"The 8.3 percent no doubt understates the weakness of the labor market in some broad sense," Bernanke said Tuesday, while noting that some job indicators are improving.
Bernanke said the Fed's forecast suggests the economy will grow fast enough to absorb new entrants into the workforce while "not making sharp improvements on the unemployment rate."
Fed officials last month estimated that the world's largest economy will grow 2.2 percent to 2.7 percent this year, according to the central tendency estimate, while the unemployment rate will average 8.2 percent to 8.5 percent in the fourth quarter.
"We still have a long way to go before the labor market can be said to be operating normally," Bernanke said earlier in prepared testimony. "Particularly troubling is the unusually high level of long-term unemployment."
The percentage of the unemployed who have remained without work for 27 weeks or more rose to 42.9 percent in January from 42.5 percent in December, the Labor Department said.
Bernanke reiterated that the benchmark interest rate will probably stay near zero at least through late 2014, while saying the economy is vulnerable to shocks.
Bernanke also repeated his call on lawmakers to reduce budget deficits.
"To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time," Bernanke said.
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