“…as painful as this recession has been, I believe that we succeeded in avoiding the second Great Depression that seemed to be a real possibility,” said Janet Yellen, president and CEO, Federal Reserve Bank (FRB) of San Francisco last Monday. “Much of the recent economic data suggest that the economy has bottomed out and that the worst risks are behind us. The economy seems to be brushing itself off and beginning its climb out of the deep hole it’s been in... This summer likely marked the end of the recession and the economy should expand in the second half of this year.”

Among the signs pointing to economic growth rather than contraction:

Industrial growth and capacity – Industrial output rose 0.8% in August, following an upwardly revised increase of 1.0% in July. The gain in July for manufacturing was revised up 0.4%, to 1.4%. In August, the capacity utilization rate for total industry advanced to 69.6%, albeit a level 11.3% below its average for the 1972-2008 period.

Personal savings rate, which averaged about 10% in the mid 1980s, plunged to 1.5% in recent years. So far this year, consumers have reversed course by choice and necessity to lift personal savings rate to about 4.5%.

Home sales and prices – Though still negative, average home sales and prices in most major markets have gained the past couple of months, according to the most recent S&P/Case-Shiller Home Price Indices.

A day after Yellen’s speech, FRB Chairman Ben Bernanke spoke at the Brookings Institution. During questions and answers after his speech, Bernanke is widely reported to have said the Great Recession was over, at least from a technical standpoint.

Wall Street surged on the news. Though markets caught their breath Friday, by Wednesday, both the Dow and S&P 500 closed at the highest levels since Oct. 6. Likewise, the NASDAQ rose to its highest level since Sept. 29.

That’s the good news, but both Bernanke and Yellen cautioned that there is plenty of economic hardship ahead.

“…The gradual expansion gathering steam will remain vulnerable to shocks,” Yellen explained. “The financial system has improved but is not yet back to normal. It still holds hazards that could derail a fragile recovery. Even if the economy grows as I expect, things won’t feel very good for some time to come. In particular, the unemployment rate will remain elevated for a few more years (9.7% currently), meaning hardship for millions of workers.

"Moreover, the slack in the economy, demonstrated by high unemployment and low utilization of industrial capacity, threatens to push inflation lower at a time when it is already below the level that, in the view of most members of the Federal Open Market Committee, best promotes the Fed’s dual mandate for full employment and price stability.

“The slow recovery I expect means that it could still take several years to return to full employment. The same is true for capacity utilization in manufacturing. It will take a long time before these human and capital resources are put to full use,” she said.

Similarly, in his Brookings Institution speech, Bernanke emphasized, “Although we have avoided the worst, difficult challenges still lie ahead. We must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a new financial regulatory framework that will reflect the lessons of this crisis and prevent a recurrence of the events of the past two years. I hope and expect that, when we meet here a year from now, we will be able to claim substantial progress toward both those objectives.”