WASHINGTON – Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the economy should pull out of a recession and start growing again later this year.
But in testimony to Congress' Joint Economic Committee, Bernanke warned that even after a recovery gets under way, economic activity is likely to be subpar. That means businesses will stay cautious about hiring, driving up the nation's unemployment rate and causing "further sizable job losses" in the coming months, he said.
The recession, which started in December 2007, already has snatched a net total of 5.1 million jobs. The unemployment rate "could remain high for a time, even after economic growth resumes," Bernanke said.
But while some economists believe unemployment could hit 10 percent by the end of this year, the Fed doesn't share that view. The unemployment rate will probably climb "somewhere" in the 9 percent range, Bernanke said.
"The loss of jobs is one of the most distressing aspects of this whole episode," he said.
Even with all the cautionary notes, the Fed chief offered a far less dour assessment of the economy.
"We continue to expect economic activity to bottom out, then to turn up later this year," he told lawmakers. "We expect that the recovery will only gradually gain momentum."
Recent data suggest the recession may be loosening its grip on the country, Bernanke said.
Bernanke: Economy should grow again later in 2009
Some positive news from the great satan (aka USA)
