Bernanke Says Economy May Shrink in First Half

Washington, DC, April 2, 2008-- Federal Reserve Chairman Ben Bernanke said in congressional testimony that the economy could contract over the first half of this year, which could signal the start of a recession.

In testimony to Congress' Joint Economic Committee, Bernanke said, "It now appears likely that gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly."

However,  Bernanke said that he expects more economic growth in the second half of this year and into next year, helped by the  $168 billion stimulus package of tax rebates and tax breaks for businesses as well as the Fed's reduction of interest rates.

"Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year," Bernanke said.