The economy continues to improve but has not yet fully recovered due to high unemployment and struggles in the housing market, according to Federal Reserve Chairman Ben Bernanke.
"We have a considerable way to go to achieve full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure, and lost savings," Bernanke said, while speaking to state legislators.
He said he expects consumer spending to improve during the upcoming quarter due to improvements in both income and credit conditions.
In addition, Bernanke said that the Fed expects inflation to remain restrained during the next few years due to stability in measures of inflation expectations.
Meanwhile, he added that in the banking industry, loan loss rates seem to have reached their peak, although many balance sheets are still struggling with troubled loans, translating into tight lending conditions.