Bernanke Warns of Possible Recession

Federal Reserve Chairman Ben Bernanke warned Congress Wednesday that the U.S. economy may contract in the first half of this year, saying a recession was possible, the Associated Press reported.

Bernanke’s testimony to the Joint Economic Committee was a more pessimistic assessment of the economy’s immediate prospects amid problems in the housing, credit and financial sectors, AP said.

The U.S. gross domestic product will likely not grow much, if at all, in the first half of this year, and may contract slightly, Bernanke told lawmakers, AP reported.

By one definition, two consecutive quarters of downturns in GDP — which measures the value of all goods and services produced in the United States — constitutes a recession, AP said.

Bernanke said that he expects more economic growth in the second half of this year and into 2009, to be helped by the federal government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses, and the Fed’s actions on reducing a key interest rate, AP said.