Real gross domestic product will grow “at a pace appreciably below its potential rate in the second half of this year and then to gradually pick up as financial markets return to more-normal functioning and the housing contraction runs its course,” Federal Reserve Board chairman Ben Bernanke told the Joint Economic Committee of Congress yesterday, according to prepared text of the testimony released by the Fed.

Bernanke called second-quarter real economic activity “surprisingly resilient” but said he saw broad deceleration in the economy recently. “In particular, the intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth,” he said. “The downside risks to the outlook thus remain a significant concern.”

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