Top Federal Reserve officials on Tuesday agreed the U.S. economy would recover this year, but amid mixed signals from a spate of recent economic data, they differed on how swift that turnaround would be.

And even though the timing of the end of this recession is unclear, they all signaled the central bank may not be done cutting interest rates.

After delivering a speech in Frankfurt, New York Federal Reserve President William McDonough said there were signs the U.S. economy was now reaching its trough and that the recession, which began last March, could be shallow.

``The economy is giving signals that the economy is at or near the bottom,'' McDonough told reporters after a speech, noting still that business investment remains weak.

With upbeat data emerging in recent weeks, some private economists have begun to speculate that the recession will likely end soon or may have already ended.

Among such data was a report last week from the Labor Department showing the pace of U.S. job losses slowed to 124,000 in December after declines averaging 400,000 in October and November.

But even with signs of improvement on the labor, service and manufacturing fronts, the timing and pace of such a recovery remains unclear to key Fed officials.


U.S. Federal Reserve Vice Chairman Roger Ferguson on Tuesday cautioned it was too early to pinpoint the timing.

``While data has been mixed, it's too early to have a strong conviction about exactly what contours a turnaround in the U.S. economy are likely to be,'' Ferguson told reporters after delivering a speech in Geneva.

Offering some optimism, Federal Reserve Bank of Philadelphia President Anthony Santomero on Tuesday predicted the U.S. economy should recover in mid-2002. But he cautioned that policymakers be flexible because of potential roadblocks.

``The economic landscape is beginning to resemble pre-attack days in one important way: it is beginning to give mixed economic signals. This is a good sign, and an indication the economy may be preparing to resume growth,'' Santomero said in a speech before the Philadelphia Chamber of Commerce.

Recent data have shown strong improvement in consumer confidence and improving activity in the manufacturing and services sectors, boosting hopes among Wall Street for a quick rebound in the economy.

But increasing signs that the recession has at least bottomed out have also added to uncertainty among financial players as to whether the Federal Reserve's rate-cutting cycle may be nearing its end.

Fed policy makers are set to meet Jan. 29-30, and many Wall Street analysts are expecting them to cut rates by a quarter of a percentage point, but some fear the Fed may signal an end to further cuts.

Over the past year, the Fed has cut short-term rates by 4.75 percentage points, bringing them to a 40-year low of 1.75 percent in an effort to drive the economy out of recession.'

But signaling the likelihood of another Fed rate cut, Santomero, currently a voting member of the Fed's rate-setting committee, cautioned that there were potential roadblocks and a recovery may take longer than some analysts think.

Some Wall Street economists are forecasting a recovery during the first half of the year.

The latest consensus in the closely watched survey by Blue Chip Economic Indicators projected that the recession would end in either February or March of this year. The next Blue Chip survey is expected to be released on Thursday.

That group in its latest consensus depicted a tepid recovery.


Federal Reserve Bank of Richmond President Alfred Broaddus said on Tuesday he expects the U.S. economy's recovery from recession to be gradual and noted that consensus forecasts, while about right, may be a bit too upbeat.

The Blue Chip Economic Indicators, in its December consensus forecast of economists, pegged growth at 0.4 percent in the first quarter and 2.6 percent in the second. Growth was seen picking up to 3.8 percent by the third quarter.

That pace of growth compares to a year before the current recession began, when the economy was plowing ahead at a pace of nearly 6 percent.

``I think the consensus projection or something close to it is the most probable outcome,'' Broaddus, who is not a voting member of the policy setting Federal Open Market Committee this year, said at a panel discussion on the Virginia state budget in Richmond.

``But I think there's a good chance that the economy may be at least a little softer than the consensus over the next year or so,'' he said. ``In either case, we'd see a more gradual recovery from the recession than in most other post-war business cycles.''