WASHINGTON -- Federal Reserve Chairman Ben Bernake addressed Congress Tuesday.
He said the economy still hasn't reached bottom, but he's cautiously optimistic that it will see improvements by the end of the year.
"We continue to expect economic activity to bottom out, then to turn up later this year," Bernanle told lawmakers. "Hey elements of this forecast are assessments that the housing market are beginning to stabilize and that the sharp inventory liquidation that's 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 gradual repair of the financial system."
Bernanke's comments come on the heels of some good news on the economic front. Wall Street is out of the red for 2009. New home sales and spending on construction is up. The positive signs have more people asking if the worst is behind us.
Sounds of Recovery?
Construction workers are busy building 1,100 new homes in a south Raleigh subdivision in North Carolina.
Click the player to watch the report from CBN News Washington Correspondent John Jessup followed by Pat Robertson's comments about the economy and inflation.
Serena Rudor, who lives across the street from the work site, doesn't seem to mind.
The sound of construction is music to her ears.
"It's better for us to have everything done as soon as possible," she said.
Good News For Wall Street
Nationally, new reports showed construction spending and pending home sales grew in the month of March and that was good news for Wall Street, bringing the S & P 500 up 3.4 percent.
The Dow Jones industrial average was also up by more than 200 points, finishing above 8, 400 for the first time since January.
Overall, stocks are now up 34 percent since their lowest levels in March, showing investors feel encouraged about the state of the economy.
"The market is building on all these little indicators that are coming in, all these little signals showing that maybe, just maybe, the recession, the worst part, is behind us," said Hilliard Lyons Floor Trader Alan Valdez.
Last week, the Fed said although the economy is still contracting, it detected signs that the recession is loosening its firm grip.
Another hopeful sign, stress tests for the nation's largest banks are expected to show that they are in reasonably good shape - and the ones who need more capital will be given six months to do it.
Recovery Still Forecast for 2009
Some economists are hopeful that the economy is stabilizing and could even mount a recovery in the second half of 2009.
"I'm hopeful and increasingly confident that businesses will stop cutting their payrolls as aggressively as all of the policy really begins to have an impact," said Moody's Economy.com's Mark Zandi.
"We'll have five percent unemployment again, but this has been a real shock to the system," said Warren Buffett, CEO of Berkshire Hathaway. "I mean if you have a major heart attack, you don't jump on your feet the next day."
The bad news is the job market lags behind when it comes to recovery and it takes time to catch up. And things will get worse before they get better. Unemployment is expected to fall right under nine percent for April and ten percent by the end of the year. The reason? Companies won't feel confident about hiring until they are comfortable that the recovery is in full swing.