Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that the economic recovery is close to faltering and recent economic indicators point to "the likelihood of more sluggish job growth" ahead.

Appearing before the Joint Economic Committee in Washington, D.C., Tuesday to deliver his outlook for the U.S. economy, Bernanke said recent data on jobless claims and surveys of hiring plans suggest job growth will continue to be weak.


The Fed chief also said the economy is growing more slowly than the Fed had expected and that the most significant factor depressing consumer confidence is poor job growth.

"The recovery is close to faltering," Bernanke told lawmakers, adding that the Fed is prepared to take further steps to prop up the recovery. "We need to make sure that the recovery continues and doesn't drop back and that the unemployment rate continues to fall downward."

Bernanke also said the brinkmanship over the debt ceiling over the summer was a negative for financial markets. Specifically, the perception in the minds of some investors that the U.S. might actively consider defaulting on its debt -- and that it might be recurring periodically.

"It was the reason that the downgrade occurred, S&P cited the political process more than the amount of debt outstanding," he said. "It's no way to run a railroad, if I may say so."

The Fed chairman also reiterated that Congress should not cut spending sharply when the economy is weak.

In prepared testimony, Bernanke said lawmakers face a complex situation. While they must avoid making decisions that could impede the recovery, he also noted they must go further than the $1.5 trillion in deficit cuts being sought by a special panel.

Bernanke also commented on the sovereign debt problems in Europe and their impact on the U.S., saying "it is difficult to judge how much these financial strains have affected U.S. economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth."

A default by Greece, the most troubled economy in the euro zone, could result in a frozen credit system, potentially pushing the struggling U.S. economy into a recession, analysts say.