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US head says recession will end this year

US head says recession will end this year article image

US Federal Reserve chairman Ben Bernanke believes the housing bust in the USA will bottom out this year, and predicts economic recovery by the end of 2009 if the credit crunch loosens its grip. Bernanke told the congressional Joint Economic Committee last night (AEST time): "We continue to expect economic activity to bottom out, then to turn up later this year." However, he saw continued high unemployment and dampened growth in the US for the remainder of the year, with momentum from recovery not evident until 2010. Bernanke warned that his positive forecast was only valid if the economy did not relapse: "An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall."

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