Federal Reserve Chairman Ben Bernanke said the U.S. economy may be starting to stabilize, but he said real recovery is still months away. He also predicted more job losses, even as the economy improves.
“We continue to expect economic activity to bottom out, then to turn up later this year,” Bernanke told the congressional Joint Economic Committee Tuesday.
“Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while,” he predicted. “We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly.”
Despite Bernanke’s words of caution, it was the Fed chairman’s most upbeat assessment since the United States fell into recession more than a year ago.
Bernanke said consumer spending, which sank sharply the second half of 2008, actually grew in the first quarter of this year. Sales of existing homes have been “fairly stable” since late last year, he said, partly because plunging home prices have made houses more affordable and interest rates on some fixed-rate mortgages have fallen below 5 percent.
The recession, however, is not yet over, the Fed chairman said, warning that many people will continue to experience harder times in the months ahead. The nation has lost about five million jobs since the recession began.
The nation’s next look at the jobless rate will come Friday, when the Labor Department releases employment figures for April.
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