"Why It's Worse Than You Think," is the headline on a column by Daniel Gross of Newsweek that points to all the reasons why the current economic slump is likely to last through the rest of the year and into 2009—much longer than the recessions of the early 1990s and 2001.

Ben Bernanke, the Federal Reserve chairman, has offered what appears to be a rebuttal, perhaps mindful that the expectations of consumers, businesses, and investors are half the battle in trying to generate a recovery.

In a speech in Chatham, Massachusetts, on Monday night, Bernanke said that despite an ugly employment report last week, "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so."

That view was supported by a survey of economists, the majority of whom believe that growth will slow this year but that the economy will avoid a recession. Blue Chip Economic Indicators said today that 53.5 percent of the 48 private economists surveyed for its June newsletter do not believe the U.S. economy is in or will enter a recession in 2008, up from 40 percent in the May survey, Reuters reports.

Yet the decline, while less steep than feared, will also go on longer than hoped for, as Gross contends.

"The subsequent recovery in growth to its trend rate will take longer than hoped a few months ago," the newsletter said.

Indeed, the glut of housing will take another 11 months to work through. Home prices are continuing to fall in many areas of the country, eroding the wealth of millions. Credit remains tight, and rising food and fuel costs will dampen spending for many months.

Bernanke also cautioned that housing and energy will continue to weigh on the economy.

"Over the remainder of 2008, the effects of monetary and fiscal stimulus, a gradual ebbing of the drag from residential construction, further progress in the repair of financial and credit markets, and still-solid demand from abroad should provide some offset to the headwinds that still face the economy. However, the ongoing contraction in the housing market and continuing increases in energy prices suggest that growth risks remain to the downside."

More important, Bernanke raised the inflation-fighting banner of the Fed, saying the recent surge in oil prices "has added to the upside risks to inflation and inflation expectations."

The Fed, he said, "will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation."

The comments were a clear sign that the Fed is finished with its aggressive cutting of interest rates that it began in September and concluded in late April, with its benchmark rate at 2 percent.

Interest rate cuts tend to take eight months to a year to work their way through the economic system, so Bernanke is apparently confident that the Fed's stimulus work is done and that inflation is the next battle.

Let's hope that confidence is justified.