Economy dragging

The economy's performance has been even weaker than previously thought, data issued Friday indicated.

The economy this spring did not grow at the previously estimated rate of 2.4 percent, but at 1.6 percent. Experts say the summer's figures are likely to indicate weak performance as well.

It helped boost investors' morale that Federal Reserve Chairman Ben Bernanke assured that he was prepared to do what it takes to keep the economy from sinking into another recession.

Speaking at a Fed conference in Jackson Hole, Wyo., Mr. Bernanke conceded the economy's progress was slower than policymakers expected and was "vulnerable to unexpected developments."

While the central bank chairman anticipates more growth next year, he spoke of several options at hand, such as directing the Fed to buy more securities to reduce interest rates on debt and stimulate spending.

His speech boosted financial markets; the Dow Jones industrial average gained 164 points. But there are limits as to what the Fed can do, having already lowered its short-term interest rate significantly.

The Fed chief noted that continuing high unemployment is a major concern, as is potential deflation. But he said that Americans are accumulating more savings and banks are poised to lend more. Consumer spending is expected to rise in 2011.

There is no doubt the economy is sputtering, and worse than previously thought. But both the Fed chairman and economists express some optimism for better days ahead.