Bernanke Sees Weak Economy, No Big Downturn

Washington, DC, June 10, 2008--The danger that the economy has fallen into a "substantial downturn" appears to have waned, Federal Reserve Chairman Ben Bernanke said Monday.

Bernanke said a federal report last week showing the unemployment rate rising from 5 percent in April to 5.5 percent in May was "unwelcome." However, he said other forces should "provide some offset to the headwinds that still face the economy."

The Fed's nterest rate cuts, the government's $168 billion stimulus package, further progress in the repair of problems in financial and credit markets, a gradual ebbing of the drag from the deep housing slump and still solid demand from abroad for U.S. exports should help the economy over the remainder of this year, he said.

Although economic activity is "likely to be weak" during the current April-to-June quarter, Bernanke said "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so."