Bernanke encouraged by sharp drop in unemployment

By JEANNINE AVERSA AP Economics Writer

WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke says the drop in unemployment over the last two months is encouraging but cautioned that it will take several years for hiring to return to normal.

In prepared testimony before the House Budget Committee, Bernanke also warns that failing to forge a plan to reduce the government's $1 trillion-plus deficits over the long term could eventually hurt the economy.

The unemployment rate was 9 percent in January after the fastest two-month decline in 53 years. Bernanke says: That declines "provide some grounds for optimism on the employment front."

Bernanke is making his first appearance before the House since Republicans took control last month. He is expected to face tough questions from them, despite being a member of the party.