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Bernanke says recession 'very likely over'

(Agencies)
Updated: 2009-09-16 07:15

WASHINGTON: Federal Reserve Chairman Ben Bernanke said Tuesday the worst recession since the 1930s is probably over, although he cautioned that pain - especially for the nearly 15 million unemployed Americans - will persist.

Bernanke said the economy likely is growing now, but he warned that won't be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.

US Chairman of the Federal Reserve Ben Bernanke speaks about a year of economic turmoil at the Brookings Institution in Washington September 15, 2009. [Agencies]

"From a technical perspective, the recession is very likely over at this point," Bernanke said in responding to questions at the Brookings Institution. "It's still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was."

The recession, which started in December 2007, has claimed a net total of 6.9 million jobs.

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With expectations for a lethargic recovery, the Fed predicts that unemployment will top 10 percent this year. The post-World War II high was 10.8 percent at the end of 1982.

Some economists say it will take at least four years for the jobless rate to drop down to a more normal range of 5 percent.

Even if the economy logs "moderate" growth in 2010, unemployment is likely to stay elevated, Bernanke suggested.

"Unfortunately, unemployment will be slow to come down. It will come down but it may take some time," he said. "Obviously, that's a very serious concern."

Drugmaker Eli Lilly & Co. said Monday that it will cut 5,500 jobs over the next two years, 14 percent of its work force, as it restructures the company into five units.

Still, Bernanke's declaration that the recession likely ended marked his most optimistic assessment yet of the economy. And his remarks came on the same day that the government report that retail sales jumped 2.7 percent in August, the most in more than three years.

All that helped to lift stocks on Wall Street. The Dow Jones industrial averaged gained nearly 57 points to 9,683.41, its highest finish since Oct. 6.

Last month, Bernanke told a Fed conference in Wyoming that economic activity appears to be "leveling out" after declining sharply at the end of last year and into the beginning of this year. He also said that the global economy was just "beginning to emerge" from recession.

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