Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that the decline in the economy may be slowing and the housing market has shown signs of bottoming. However, the Fed chief warned that the labor market remains a possible source of concern.

The recent data...suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing, Bernanke said in prepared remarks to the Joint Economic Committee of Congress.

The Fed chair added that the housing market has also shown some signs of bottoming. He said sales of previously-owned homes have been fairly stable since late last year, while sales sales of new homes have firmed a bit in the most recent data.

The job market remains a source concern however, according to Bernanke.

The most recent information on the labor market--the number of new and continuing claims for unemployment insurance through late April--suggests that we are likely to see further sizable job losses and increased unemployment in coming months, the text of his prepared statement read.

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