Federal Reserve Chairman Ben Bernanke told Congress Wednesday that U.S. economic growth is in line with expectations and there's still a reasonable possibility that we'll see a rebound later this year.

His remarks came during scheduled testimony at the House Budget Committee and one day after the Dow posted its biggest single-day point loss since the market reopened after the Sept. 11 attacks. He said the Fed is watching the financial markets but they seemed to be working well.
Data released by the U.S. Commerce Department indicated that new home sales fell 16.6 percent in January, the steepest drop since 1994. Preliminary estimates put fourth quarter real GDP growth at an annual rate of 2.2 percent, up just slightly from 2 percent the previous quarter but well off the previously estimated 3.5 percent. Analysts said the small acceleration from third quarter was driven mainly by personal consumption expenditures, exports and government spending. Consumer prices, a key statistic the Fed uses to set interest rates, rose at an annual rate of 1.9 percent versus 2.2 percent for the prior quarter.
For the year, real GDP increased 3.3 percent, compared with a 3.2 percent increase in 2005. The major contributors were personal consumption, exports and purchases of equipment and software. Imports, which are a subtraction in the calculation, were up for 2006.
A separate report showed a 7.8 percent drop in new orders for manufactured goods in January. This followed two consecutive monthly increases. Orders for transportation equipment fell 18 percent, led by decreases for non-defense aircraft and parts. Shipments of manufactured durable goods inched up 0.2 percent in January, marking the fifth increase in 6 months. Unfilled orders were up 0.1 percent and have shown some gains 20 of the last 21 months. Inventories rose 0.3 percent, up 12 of the last 13 months.