Bernanke: recovery will take time

Oct 15 - Federal Reserve Chairman Ben Bernanke said slowdowns in spending and the labor market mean it'll take time for the U.S. economy to recover.

He also suggested he would be open to another cut in interest rates.

Fred Katayama reports from New York.Federal Reserve Chairman Ben Bernanke said he doesn't expect the U.S. economy to recover immediately despite global efforts to stabilize the financial markets. He said it would take time for credit to start flowing normally again.(SOUNDBITE)(English) BEN BERNANKE, FEDERAL RESERVE CHAIRMAN, SAYING: "Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away."Speaking at the Economic Club of New York, he said healing will take time because of slowdowns in spending by consumers and businesses and the labor market. Economist Henry Kauffman agrees.(SOUNDBITE)(English) HENRY KAUFFMAN, PRESIDENT, KAUFFMAN & CO., SAYING:"We're in a very difficult situation, a situation that is moving from the financial to the economic side where we've not yet resolved all the financial problems. And we're in a recession, and it'll be prolonged and the recovery will be slow. "He also hinted at possibly cutting interest rates further. (SOUNDBITE)(English) BEN BERNANKE, FEDERAL RESERVE CHAIRMAN, SAYING:"The turmoil in the financial markets and the funding pressures on financial firms pose a significant threat to economic growth ,,,, We will continue to use all of the tools at our disposal to improve market functioning and liquidity, to reduce pressures in key credit and funding markets, and to complement the steps the Treasury and foreign governments will be taking to strengthen the financial system." On the bright side, he noted that inflation risk is ebbing, which suggests he sees room for a rate cut. And he said the current meltdown was different from the Great Depression of the 1930s because the government acted quickly and aggressively.But for the most part, his speech reflected a cautious tone. Fred Katayama, Reuters, New York.