U.S. economy 'close to faltering,' Bernanke says

The chairman of the U.S. Federal Reserve, Ben Bernanke, warned Tuesday the American economic recovery "is close to faltering" and the central bank is ready to do more to support growth.

His comments came less than two weeks after the Fed unveiled itsthird economic stimulus effort, aimed at lowering long-term interest rates,since the start of the financial crisis, and two months after it promised tokeep interest rates lowuntil 2013.

North American marketscame off their morning lowsafter Bernanke suggestedadditional stimulus measures would be possible in the coming months.

Bernanke said the recession was deeper than the Fed first thought and recovery has been slower than anticipated.

"We need to make sure that the recovery continues and doesn't drop back and that the unemployment rate continues to fall downward," Bernanke said.

Poor job growth is the biggest reason for depressed consumer confidence, Bernanke told the Joint Economic Committee of Congress.

Bernanke warned against deep spending cuts, saying "we need to make sure that the recovery continues and doesn't drop back and that the unemployment rate continues to fall downward."

But he also said lawmakers face a delicate challenge, in that they must also eventually cut spending more deeply than the $1.5 trillion in deficit cuts being sought by a special panel.