WASHINGTON — While financial markets, and the Obama administration, were buoyed by the decline in the U.S. unemployment rate in January to its lowest level in three years, Federal Reserve chairman Ben Bernanke Tuesday cautioned that the drop to 8.3% “understates” the continued weakness of the jobs market.

“Our estimate of long-run employment of 5.2% to 6% is still quite far below 8.3%, of course,” Bernanke said during testimony before the Senate Budget Committee.

He noted that the unemployment rate does not reflect the significant number of people out of the labor force, or those forced to make do with just part-time work.

“So the 8.3% no doubt understates the weakness of the labor market in some broad sense,” Bernanke said.

Bernanke launched a staunch defense of the Fed’s actions to support the recovery, taking issue with those that say the central bank’s policies have hurt growth.

“I think that our policy is strengthening the economy, and that reduces uncertainty and increases the willingness of firms to hire and invest,” he said.

For instance, Bernanke argued that while lower interest rates reduce the return for savers, that group also has holdings of corporate bonds, stocks, and a variety of other securities.

“The returns on those securities depend very importantly on the strength of the economy,” Bernanke said.

Driving down interest rates to almost zero also makes lending a more attractive proposition for banks, he said, as the alternative is very low-yielding Treasury securities.

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