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Federal Reserve Chairman Ben Bernanke chastised Washington on Wednesday, saying the failure of President Obama and Congress to agree on a deal to avoid the “fiscal cliff” is already inflicting damage on the economy.

In his last scheduled public remarks before tax hikes and spending cuts kick in automatically on Jan. 1, Bernanke linked the political standoff to falling consumer confidence and said a failure to reach a deal would wreak havoc on a faltering recovery.

“Why is it that consumer confidence dropped so sharply this week? Why is it that small-business confidence dropped so sharply? Why are markets volatile? Why is business investment among its weakest levels during the recovery?” he told reporters. “All of these things, at least to some extent, can be traced to the anticipation and concern over the fiscal cliff.”

Consumer confidence earlier this month dipped to its lowest level in four months, while on Tuesday, the National Federation of Independent Business’s optimism index fell to 87.5 for November, a drop of more than 5 points and its lowest reading since March 2010.

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