Federal Reserve Chairman Ben Bernanke said Tuesday there have been "tentative signs" that the recession may be easing.
Federal Reserve Chairman Ben Bernanke said Tuesday there have been "tentative signs" that the recession may be easing.
But he also warned that any hope for a lasting recovery hinges on the government's success in stabilizing shaky financial markets and getting credit to flow more freely again.
Specifically, the Fed chief mentioned improvements in recent data on home and auto sales, home building and consumer spending as flickering signs of encouragement.
"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing," Bernanke said in remarks prepared for students and faculty at Morehouse College in Atlanta.
"A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets," he said.
But the Fed is "making progress on that front as well," Bernanke said, and will keep working to ease financial and credit stresses so those markets operate normally.
To revive the economy, the Fed has cut a key bank lending rate to a record low of near zero and has rolled out a number of radical programs to spur lending to Americans, a key ingredient to turning around the economy.
On that front, the Fed recently plowed $1.2 trillion into the economy in an attempt to reduce interest rates for mortgages and other loans.
Many analysts believe the economy will continue to shrink in the April-June quarter but not nearly as much as it had been — perhaps at a rate of 2 to 2.5 percent.
The economy shrank at a 6.3 percent rate in the final three months of 2008, the worst showing in a quarter-century.
