WASHINGTON — Federal Reserve Chairman Ben S. Bernanke didn't sway the markets much Tuesday with his cautious optimism about an economic recovery later this year, and he downright chilled U.S. workers with his prediction of "further sizable job losses" to come.
In his most positive view of the economy since the financial crisis began, Bernanke told Congress that the deep recession was easing.
But he warned that growth would be slow and unemployment would continue to rise, dashing any hopes that last month's jobless figures, to be released Friday, would be less than dismal. Economists expect that nationwide unemployment last month shot up close to 9%, which would be the highest in 26 years.
"The most recent information on the labor market . . . suggests that we are likely to see further sizable job losses and increased unemployment in coming months," Bernanke said. "The loss of jobs and the deterioration of the labor market is one of the most distressing aspects of this whole episode. We've already seen about 5 million jobs lost."
Bernanke said the Fed's forecast of an end to the recession was tied to "continuing gradual repair of the financial system." A key to that repair is the health of major U.S. banks, which are undergoing special government stress tests to determine whether they can withstand worse-than-expected economic conditions.
Government officials on Tuesday privately briefed executives from the nation's 19 largest banks amid reports that about 10 of them need to raise more money. Bernanke would not reveal the results, which the Fed will disclose Thursday, but said many of the banks should be able to raise it publicly instead of turning to government bailout funds.
With uncertainty about the looming stress tests results and April jobless numbers, Bernanke's comments did little to move the stock market. The Dow ended Tuesday relatively flat, down 16 points, after rocketing up 214 points Monday.
In giving his more optimistic economic forecast, Bernanke cautioned that an end to the recession didn't mean the pain for U.S. workers was close to over. Unemployment rates would continue to remain high even after the recession has officially ended, he told the Joint Economic Committee.
Bernanke's comments came as a survey of economists by Bloomberg News found that the median estimate for April unemployment was 8.9%. The unemployment rate in March was 8.5%. But it was significantly higher in many states, including California, where the figure was 11.2%.
