Private economists said they viewed Bernanke's sober assessment as a clear signal that the Fed, which cut interest rates by 1.25 percentage points in two moves in January, is prepared to cut rates further.

Brian Bethune, an economist at the private forecasting firm Global Insight, said he looked for bold half-point cuts at the Fed's next two regular meetings on March 18 and April 30. He said that what came out "loud and clear" from Bernanke's testimony was an increased concern about the stresses to the financial system from the credit crisis.

While saying that housing represented the greatest threat to the economy, Paulson, who testified along with Bernanke and Christopher Cox, chairman of the Securities and Exchange Commission, said he did not believe the economy would fall into a recession. He said the administration was working now to ensure that government checks ranging from $300 to $1,200 were sent out to taxpayers without delay starting in May.

The rebate checks are part of a stimulus package that Congress passed last week. The package is expected to give the economy a sizable jolt in the second half of this year, although many economists believe it will be too late to keep the economy from recording two consecutive quarters of negative economic output, the classic definition of a recession.

Pressed to say what more the administration plans to do, especially in dealing with the threat of a wave of mortgage foreclosures, Paulson said he continued to look for good ideas, but at the moment did not see the need to do any more than current efforts. Those efforts include encouraging the mortgage industry to freeze rates on some subprime mortgages for five years and offering a 30-day reprieve on foreclosures for homeowners seriously behind on their payments to give them time to try to work out a loan modification with their lenders.

But a group of Senate Democrats said those efforts are far short of what is needed. They announced outside of the hearing that they were introducing a second stimulus measure that would have a variety of initiatives to help stem foreclosures, including providing $4 billion in new community development grants to purchase and rehabilitate foreclosed properties.

"If we really want to tackle the economic problems the country is facing, we must address the housing crisis that got us here," said Sen. Charles Schumer, D-N.Y., a supporter of the new stimulus measures.