Federal Reserve Chairman Ben Bernanke continued to testify before Congress about his attempts to stabilize the economy and stimulate Wall Street, consumer activity and exchange traded funds (ETFs).

The good news: the United States is nowhere near the stagflation situation that plagued the country in the 1970s, says Jeannine Aversa for the Associated Press, and he doesn’t anticipate it. Stagflation is the situation in which growth is flat, but prices rise.

Bernanke said that inflation, however, is complicating the Fed’s job. High oil prices that are still on the rise may be the biggest threat toward inflation. He also said that most major banks will recover from the mortgage crisis.

In another hint of a recession, the Labor Department reported that first-time unemployment claims rose to 373,000 – the highest level since late January. Stocks fell in response to the news, says Madlen Read for the Associated Press.

President Bush, in a news conference, asked for patience and to allow the stimulus package to do its work before calling for more action.

The Federal Reserve has indicated that it’s getting ready to cut rates again, in hopes of avoiding stagflation. Over a span of eight days in January, the Fed took off 1.25% percent, with the next cut possible at the March 18th meeting. Some analysts are predicting the rates will drop again in April.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.