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Federal Reserve chairman Ben Bernanke briefed members of Congress on the state of the economy on Tuesday, suggesting that conditions seem to be hitting bottom but aren't necessarily on the verge of significantly improving yet.
In his remarks, Bernanke suggested that the economy is contracting slower than it had been, although recent federal statistics showed that it shrank by another 6 percent in the first quarter of the year.
Bernanke said that he sees some signs of bottoming out in the housing market, which could bode well for a broader economic recovery. However, unemployment is unlikely to improve in the short term, with 15 million jobs having been lost in the current recession and with months of stagnation likely still on the horizon.
"We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time," said Bernanke.
While a slight bump in consumer spending was a one of the favorable economic indicators that Bernanke noted, he was less optimistic about the short-term state of business investment, while also citing ongoing weak demand for commercial and industrial loans.
By Bill Laforme
Bernanke sees economy starting to bottom out
Federal Reserve chairman Ben Bernanke briefed members of Congress on the state of the economy on Tuesday, suggesting that conditions seem to be hitting bottom but aren't necessarily on the verge of significantly improving yet. In his remarks, Bernanke suggested that the economy is contracting slower than it had been, although recent federal statistics showed that it shrank by another 6 percent in the first quarter of the year.
Bernanke said that he sees some signs of bottoming out in the housing market, which could bode well for a broader economic recovery. However, unemployment is unlikely to improve in the short term, with 15 million jobs having been lost in the current recession and with months of stagnation likely still on the horizon.
"We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time," said Bernanke.
While a slight bump in consumer spending was a one of the favorable economic indicators that Bernanke noted, he was less optimistic about the short-term state of business investment, while also citing ongoing weak demand for commercial and industrial loans.
By Bill Laforme
