Bernanke says improvements are spotty

WASHINGTON, May 5 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke said Tuesday improvements in the economy were spotty with business conditions remaining weak.

"In contrast to the somewhat better news in the household sector, the available indicators of business investment remain extremely weak," Bernanke told members of the Joint Economic Committee in Washington.

Bernanke said the housing market, down for three years, had "shown some signs of bottoming" and the pace of economic contraction "may be slowing."

Consumer spending grew in the first quarter, he said.

The threat of inflation, he said, had "diminished appreciably," but the job market -- having shed 5 million jobs since the recession began -- showed signs it would worsen before it improved.

On the business front, Bernanke said, "firms are still reporting net declines in new orders and restrained capital spending plans." The commercial real estate market remains poor and "the number of new projects in the pipeline has been shrinking," he said.

In the financial sector, Bernanke noted improvements in the commercial paper market and in mortgage markets, helped by historically low mortgage interest rates.

Bottom line: "We continue to expect economic activity to bottom out, then to turn up later this year," he said.