FEDERAL Reserve Chairman Ben Bernanke warned Congress Tuesday that the $US85 billion ($A83.02 billion) in spending cuts of the March 1 sequester would place a "significant" additional burden on the US economic recovery.
"The Congress and the administration should consider replacing the sharp, front-loaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually," he told a Senate hearing.
Bernanke cited data from the Congressional Budget Office projecting that the cuts, to be implemented over the next seven months if no moderate substitute program is agreed, would reduce potential economic growth by 0.6 per cent.
"Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant," he said.
"Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run."
Bernanke said US economic growth had rebounded from the fourth quarter, when initial estimates say the economy actually contracted by 0.1 per cent.
"Available information suggests that economic growth has picked up again this year," he said.
The economy continues to grow "at a moderate if somewhat uneven pace."
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