By: AP and Reuters | 03 Mar 2009 | 10:26 AM ET 
Federal Reserve Chairman Ben Bernanke says the timing and strength of any economic recovery will hinge on the government's ability to prop up shaky financial markets.
In testimony prepared for the Senate Budget Committee, Bernanke says that although progress has been made on the financial front since last fall, "more needs to be done."
The Obama administration revamped a $700 billion financial bailout program aimed at helping strengthen banks, but has said additional money could be needed.
Bernanke urged bold government action to pull the economy out of a deepening slump, even if it means a surge in federal debt.
"We are better off moving aggressively today to solve our economic problems," he said.
"The alternative could be a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment, and incomes for an extended period," he said.
Meanwhile, President Barack Obama said Tuesday he saw little hope of near-term improvement in the U.S. economy after a staggering drop in gross domestic product in the final three months of last year.
Slideshow: Origins of the Financial Crisis
"The economy's performance in the last quarter of 2008 was the worst in over 25 years.
And frankly the first quarter of this year holds out little promise for better returns," he said in a speech at the Department of Transport.
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