Economic growth up slightly in the first quarter

The Commerce Department also announced that orders for durable goods increased more than expected in May after slowing in April, calming concerns that the slowdown in manufacturing might be prolonged. High energy costs slowed the sector’s expansion although its still growing and has been a leading contributor to the nation’s economic expansion.  

High fuel and food prices have sapped the economy’s acceleration this spring and have likely restrained growth for the April-June quarter, according to economists. 

Facing a dismal job-creation picture, the economy needs to pick up pace to bring down the 9.1 percent unemployment rate and get money into the pockets of consumers to spur more spending, a factor that represents 70 percent of economic activity. 

Bernanke said he expects unemployment to improve “painfully slowly” and that “recent labor market indicators have been weaker than anticipated.”

Employers added only 54,000 net new jobs in May, much slower than the average gain of 220,000 per month in the previous three months. 

First-time unemployment benefit applications rose 9,000 to a seasonally adjusted 429,000, the largest increase in a month, for the week ended June 18. It was an increase from last week’s revised figure of 420,000, the Labor Department said Thursday. 

Initial claims applications have remained persistently high, staying above 400,000 for the past 11 weeks.

Initial jobless benefits applications had fallen in February to 375,000, a level that signals sustainable job growth. But applications surged in April to 478,000, an eight-month high.

High commodities prices have sapped household budgets, and consumers remain uncertain about the recovery, causing them to save more and pay down their debt to improve their personal balance sheets. 

The Fed acknowledged on Wednesday that the economic recovery has slowed, downgrading its growth forecast for the year, ranging from 2.7 to 2.9 percent.

The economy has grown at a pace of about 2.8 percent since the economic downturn ended, but that’s only about half as fast as what is expected after such a deep recession. 

The housing industry isn’t helping out either, with slow sales hampered by tighter lending standards and dropping prices despite near-record-low mortgage rates that might normally spur purchases. 

The sector has been further hampered by tight lending standards, high unemployment and dropping prices created by a glut of distressed homes on the market. 

Bernanke warned that some problems, such as the weak housing market, could persist into next year.