Federal Reserve Chairman Ben Bernanke says he thinks the recession will probably be over by the end of this year but he still sees a risk there is not enough political will to stabilize the banking and financial sectors.
In his first televised interview since taking office, Bernanke told CBS's 60 Minutes on Sunday that "We'll see the recession coming to an end probably this year," adding that recovery would occur beginning in 2010.
"This [economic] decline will begin to moderate, and we'll begin to see a leveling off," Bernanke said.
The Fed chief said even if the recession ends this year, the unemployment rate will continue to climb past the current 8.1 percent.
"We won't be back to full employment. But we will, I hope, see the end of these declines that have been so strong in the last couple of quarters," he said.
But he warned that the biggest risk is that "we don't have the political will" to continue government programs designed to ease the recession.
"In which case ... we can't count on recovery," he said.
Bernanke told Congress in January that the Fed believes there is a reasonable prospect the recession that took hold in December 2007 will end this year and that 2010 will be a year of recovery.
Global markets reacted to news of profits from three leading U.S. banks and to a weekend pledge from Group of 20 nations to coordinate their efforts to tackle the global economic crisis. Asian stocks struck a one-month high on Monday as reassurances over the health of the U.S. banking industry sparked a broad recovery in investor appetite for risk, while government bonds also gained on hopes for more central bank buying.
Reports that the Bank of Japan was considering buying debt to improve bank capital cushions boosted Japan's Nikkei average 1.8 percent, lifting it further away from a 26-year closing low hit last week. Shares of Mitsubishi UFJ Financial Group, Japan's biggest lender, climbed 5.3 percent.
Last week, U.S. banking giants Citigroup, Bank of America and JPMorgan Chase all said they were profitable in the first two months of the year, unleashing a relief rally in battered financial shares around the world.
The U.S. financial system remains fragile, despite a $700 billion bailout of the banking system approved by Congress in October, and President Obama has said more money will very likely be needed to repair debt-laden banks.
From NPR staff and wire service reports