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Add Fed Chair Ben Bernanke's voice to the growing chorus that the recession appears to be over and a long slow recovery is beginning. Bernanke spoke at the Brookings Insititution yesterday about the events of the last year, and during his speech he noted that he was well aware that forecasters were announcing the end of the recession. Here is a key excerpt from the speech. But the general view of most forecasters is that that pace of growth in 2010 will be moderate, less than you might expect given the depth of the recession, because of ongoing headwinds, including still ongoing financial and credit problems, you know, deleveraging by households, the needs for adjustments in the economy, sectoral adjustments in the economy, the need for a fiscal exit at some point, many, many factors that will likely, at least based on current information, make the 2010 recovery moderate, and in particular, not much faster than sort of the underlying potential growth rate of the economy. And the arithmetic is that unless the economy grows, you know, significantly faster than its longer term growth rate, it’ll be relatively slow in creating jobs over and above those needed to employ people coming into the labor force, and therefore, the unemployment rate would tend to come down quite slowly. So that’s a risk, that’s a possibility. Of course, there is on both sides of that forecast; we could have a stronger recovery, we could have a weaker recovery, but if we do, in fact, see moderate growth, but not growth much more than the underlying potential growth rate, then, unfortunately, unemployment will be slow to come down. It will come down, but it may take some time. Obviously, that’s a very serious concern, and that’s one reason why, even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was, and so that’s a challenge for us and all policy-makers going forward. You can read a full transcript of the speech, and watch the full session by clicking here .

The Wall Street Journal 's August forecasting survey shows most of the participating economists feel the economy stabilizing: After months of uncertainty, economists are finally seeing a break in the clouds. Forecasts were revised upward for every period, with 27 economists saying the recession had ended and 11 seeing a trough this month or next. Gross domestic product in the third quarter is now expected to show 2.4% growth at a seasonally adjusted annual rate amid signs of life in the manufacturing sector, partly spurred by inventory adjustments and strong demand for the "cash for clunkers" car-rebate program. Here's what the Journal's GDP forecasting trend looks like: This month the Journal asked economists to weigh in on Ben Bernanke. The Fed Chair has 6 months left in his current term, and the economists surveyed give him a 71% chance of being reappointed. Wall Street Journal news editor Phil Izzo discusses econiomists' views on Bernanke and the survey with Kelly Evans : Click here for full coverage of the survey, and here for the Journal's always useful interactive survey charts and graphs.

Wall Street Journal economics editor David Wessel 's work has been required reading/listening/viewing for anyone tracking the downs, and downs, and ups, and downs, and downs (you get the point) of the economy over the last year. Now he has a new book out: In Fed We Trust: Ben Bernanke's War on the Great Panic , Michiko Kakutani reviews the book in the New York Times , and calls it "essential, lucid — and, it turns out, riveting — reading." [Wessel's] overall assessment: “Every time officials at the Treasury or the Fed thought they finally had gotten ahead of the Great Panic, they turned out to be insufficiently pessimistic. This would be a distinguishing characteristic of this chapter in American economic history: even when officials thought they were planning for the worst-case scenario, they weren’t.” Three policy makers in particular receive low scores from Mr. Wessel. He argues that Mr. Paulson’s abrupt changes of course and failure to understand “the theater” of crisis management hurt his credibility and undermined public confidence. He says that President George W. Bush was “largely a spectator” to “the biggest threat to American prosperity in a generation” possibly because he knew how unpopular he was and figured “he would make Paulson’s job tougher if he appeared to be calling the shots” or because the Bush White House, “stumbling through its last few months, was simply exhausted and understaffed.” And he takes the former Fed chairman Alan Greenspan to task for allowing economic conditions to develop that fueled the credit crisis in the first place. Read the full review here . And read an excerpt of In Fed We Trust here .

Ben Bernanke has half a year left on his term as chair of the Federal Reserve , and at this point it is not certain whether he will be asked to serve another. Bernanke has said that he expects the economy to pick up later this year , and perhaps his future as chair depends on whether he is right or not. David Wessel , economics editor of the Wall Street Journal , assesses Bernanke's tenure in this short video, and says Bernanke "did a great job in saving us from something that could have been a catastrophe."

Federal Reserve Chair Ben Bernanke testified on the federal budget before the House Budget Committee today. He told the committee that he expects the US economy to grow later this year, and that, while recovery will be slow, he believes the federal government's overall response--and the Fed's approach specifically--has been effective in keeping the financial crisis for doing more damage. Here are three ways to catch his statement. 1) You can read his full statement, provided by the Fed here ; 2) You can watch an excerpt, thanks to the Wall Street Journal ; 3) You can watch some of the question and answer with Wyoming Rep. Cynthia Lummis (R), thanks to Cynthia Lummis; 4) Or you can read a fake interview from Mark Thoma , in which Thoma injects his own questions into Bernanke's prepared statement, and in the process provides some helpful context for the remarks. It's available here .

Federal Reserve Chair Ben Bernanke testified before the Joint Economic Committee of Congress yesterday, and he said the "pace of contraction may be slowing down." That statement may not come across as an enthusiastic celebration of economic conditions, but it represents a sharp change from Bernanke's February testimony before Congress. Overall, Bernanke struck a relatively optimisitc tone about economic conditions, though one that remains cautious as he stressed recovery will be slow. He also stressed that recovery depends on the federal government's success in fixing the structural problems in the overall financial system: We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters. Final demand should also be supported by fiscal and monetary stimulus. An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall. You can watch an excerpt of Bernanke's opening statement here: Read a transcript of Bernanke's statement here . Watch the full hearing on the Joint Economic Committee's website here .

Ben Bernanke is still chair of the Federal Reserve for at least another week, and yesterday he spoke out about US banks' need for more money. So as the debate over fiscal policy and the stimulus package continues to rage, monetary policy is still part of the game. Bernanke says he is in favor of a massive stimulus package, and he is supporting President Bush's call--in cooperation with President-elect Obama--for Congress to release the remaining funds in TARP. But he warns that the federal government needs to aid the banks, regardless of how unpopular that may be. From the New York Times : Though the Fed chairman acknowledged that people in many countries were “understandably concerned” about pumping government money into the financial industry while often turning a cold shoulder to other sectors, he defended the effort as unpleasant but necess ary. “This disparate treatment, unappealing as it is, appears unavoidable,” he said. “Our economic system is critically dependent on the free flow of credit, and the consequences for the broader economy of financial instability are thus powerful and quickly felt.” So as much as it seems there is a battle between a monetary policy camp and a fiscal policy camp--see Daniel Gross's Moneybox column today at Slate--Bernanke reminds us that we may not be able to have one without the other. Martin Wolf's Economists Forum over at the Financial Times has provided great insight into understanding monetary policy tools. Today Wolf goes Down Under for some thoughts on Zero Interest Policy (ZIP) from Stephen Greenville of the Lowy Institute in Sydney. Greenville is a former deputy-governor of the Australia Fed and he looks at the question of whether , with central bank rates at or near zero, monetary policy has "become impotent in the US and Japan?" While the zero bound leaves no room for further shift in interest rates, at the same time it removes a constraint on central bank operations. Normally they have to balance the money market each day through open market operations, supplying the public with the currency it wants to hold and giving the banks a comfortable level of reserves. This is usually a fairly routine process, supporting the official interest rate setting. But with interest rates at zero, the authorities can push out as much base money as they want to - quantitative easing (QE) is the name of the game. In itself, more base money may not do much: it just accumulates in bank balance sheets (as happened in Japan in 2001-2005 and is happening now in the US). But the central bank can use base money to buy longer-dated government paper, pushing down the yield curve, partially addressing the first problem mentioned above. More powerfully, it can buy private sector assets. Buying undervalued assets not only helps to unclog illiquid markets, it also adds capital to the balance sheets of those who hold these undervalued assets, as the price is bid up. That said, don't put Greenville in the camp that thinks monetary policy has enough juice to be effective at this stage. Certainly, let’s use the opportunity to fix infrastructure through fiscal expansion. But how do you shrink the house-of-cards which is the financial sector, without bringing the whole lot down? While this necessary contraction is happening, how to maintain the flow of essential funding to good enterprise? How to distinguish between good and toxic assets, when the “lemons” problem is ubiquitous? All this requires micro-level banking analytical skills, which seem to have atrophied. At the macro level, using ZIP to signal that money has no time value might be appropriate, but it doesn’t do much to address these micro-issues. A zero interest rate (or even one with a risk premium on top of this) is a low hurdle-rate for new investment proposals to jump. Whatever is holding back demand now, it isn’t the level of interest rates: we shouldn’t waste too much energy regretting America’s inability to lower interest rates further. You can read Greenville's full article here .