Federal Reserve chairman Ben Bernanke says he sees a 'reasonable prospect' of an end to the recession this year if the US government's rescue and stimulus programmes work as intended.
But he warned in his semi-annual address to Congress that a full economic recovery could take more than two or three years.
Bernanke's comments came as new figures showed that US consumer confidence dived to a new all-time low in February due to worsening business conditions and a weakening job market.
The Conference Board research group said its consumer confidence index, plunged to 25 this month, the lowest level since data began in 1967, from January's 37.4. Lynn Franco, director of the board's consumer research centre, said the index suggested that overall economic conditions had weakened even further in the early part of this year.
Bernanke was guarded in his outlook and noted that the US economy is in the midst of a 'severe contraction' that has continued into the first quarter of 2009. Despite numerous risks to the outlook, Bernanke said a variety of initiatives appeared to be steadying financial markets.
Unemployment was expected to remain at high levels through 2011, which would be a drag on economic activity, the Fed chairman noted. He also said that, because of the global nature of the slowdown, the US economy could be dragged down further by weakness in its trading partners.
Bernanke delivered the Fed's economic projections, which had been released last week and predicted a contraction of between 0.5% and 1.3% in the US economy this year.
Meanwhile, figures showed that home prices in top US cities fell by a record annual rate of 18.5% in December. The Standard & Poor's/Case-Shiller survey covers the 20 largest US metropolitan areas. In the top 10 cities, prices dipped 19.2%.
