Bernanke says recession "very likely" over

By Alister Bull and Mark Felsenthal

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Tuesday that the worst U.S. recession since the Great Depression was probably over, but the recovery would be slow and it would take time to create new jobs.

"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," Bernanke said after giving a speech at a Brookings Institution conference.

In declaring the recession over, Bernanke went slightly beyond the Fed's most recent assessment that the economy was levelling off and that indications on growth had improved.

However, he cautioned that growth next year would probably be not much faster than the economy's so-called long-run potential rate, which meant it would be slow to absorb excess capacity and pare the unemployment rate.

"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," Bernanke said.

He spoke on the one-year anniversary of the collapse of Lehman Brothers, which sparked a global panic that forced the Fed to cut interest rates to almost zero percent.

Economists generally estimate U.S. trend potential growth to be in a range around 2.5 percent.

Bernanke acknowledged that a recovery could turn out to be either stronger or weaker than forecasters expect, but warned of ongoing pain in the labour market under the expected growth rate.