Fed's Bernanke Says Economy Will Grow in 2009Federal Reserve Chairman Ben Bernanke told the Congress' Joint Economic Committee that the economy should begin growing again later this year. This testimony is Bernanke's most optimistic outlook of the national economy since the recession began.
However, Bernanke says that though the recovery may start, the activity that will accompany it will be less than normal. Businesses will remain slow to hire, causing more unemployment and more job losses in coming months.
The recession that began in December 2007 has already claimed 5.1 million jobs. Unemployment could remain high for a time even after normal economic growth rates return, Bernanke told the committee.
Some economists have pessimistically forecast unemployment hitting 10 percent by the end of this year; the Fed's Chairman isn't as dour. Bernanke sees the unemployment rate will probably climb somewhere in the 9 percent range. The loss of jobs is one of the most distressing aspects of this whole episode, says Bernanke.
The Fed continues to expect economic activity to bottom out, then to turn up later this year, Bernanke says. Then he says the recovery will only gradually gain momentum.
Recent reports show the recession may be loosening its grip on the country, Bernanke notes. The housing market, which has been in a slump for three years, has shown some signs of bottoming. Consumer spending, which collapsed in the second half of last year, came back to life in the first quarter.