The head of the US Federal Reserve expects the recession to end this year unless there is a major financial setback.
But chairman Ben Bernanke said growth would remain subdued and unemployment high after the recovery had begun.
He told a congressional Joint Economic Committee on Tuesday that both the housing market and consumer spending were stabilising: "We continue to expect economic activity to bottom out, then to turn up later this year."
Mr Bernanke said his forecast for the economy was based on the continuing recovery of the financial system.
The BBC reports Mr Bernanke has been getting increasingly optimistic during the past couple of months in his outlook for the US economy.
In April he said there were signs that US economic tightening was easing.
