Recession very likely over: US Fed chief

Washington: In his first speech since he was reappointed, US Federal Reserve Chairman Ben Bernanke said the recession is "very likely over" but detailed the tough road ahead for the economy.

Bernanke also said that despite delays, he is confident that Congress will pass changes to financial rules to ward off future collapses.

"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 policymakers going forward," said Bernanke.

He hit hard on the "challenges" for the Fed and all policymakers in dealing with a sluggish unemployment rate as the economy recovers from a recession that began in December 2007.

Many economists expect consumer spending to increase in the current July-September period, after it fell in the second quarter, mostly because of the clunkers programme.

That could cause the economy to grow by as much as three to four per cent in the third quarter, helping to end the worst recession since the 1930s.

But analysts worry that without consistent consumer spending growth, the recovery could weaken next year, as government stimulus efforts end.

Meanwhile, unemployment continued to rise, holding down wages and limiting the ability of consumers to spend.

The unemployment rate, currently at a 26-year high of 9.7 per cent, is expected to hit 10 per cent by the end of this year and keep rising to around 10.3 per cent next spring.