There is a light at the end of the tunnel. According to Federal Reserve Board Chairman Ben Bernanke, the U.S. economy is bottoming out and is likely to turn upward later this year, reports MarketWatch.
"We are hopeful that the very sharp decline we saw beginning last fall through early this year will moderate considerably in the near term and we will see positive growth by the end of the year," Bernanke told the Joint Economic Committee on Tuesday. "The recent data ... suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing," he said.
His optimism came with two caveats -- any reversals in the financial market or banking system surprises would darken the economic outlook and slow the recovery.
More optimistic than he has been for some time, Bernanke feels the Fed’s unprecedented actions over the past year are going to generate a recovery. The interest rate target has been slashed to zero, and is expected to stay in that range through the end of the year, credit has been pumped into the economy, the Fed is buying Treasury securities and mortgage debt, inflation is expected to stay low, and the drop in economic activity overseas may also be nearing its end, he said.
Let’s hope he’s correct.