"Economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," Bernanke said at an annual Fed conference in Jackson.

Bernanke acknowledged no missteps by the central bank in managing the worst crisis since the Great Depression. But he conceded that consumers and businesses were still having trouble getting loans, even though the financial system is gradually stabilizing.

Last year, a sense of foreboding hung in the air at the annual summer conference. Mortgage giants Fannie Mae and Freddie Mac were soon to topple. A dying Bear Stearns, with the Fed's help, had already fallen into the arms of JPMorgan Chase.

His hopeful remarks contributed to a rally on Wall Street. The Dow Jones industrial average surged 1.7 percent, and broader stock averages gained sharply.

Despite his upbeat tone, Bernanke cautioned that the recovery was likely to be "relatively slow at first."

Unemployment, now at 9.4 percent, is widely expected to hit double digits this year and to remain high for many months.

Financial institutions face further losses on soured investments. And many businesses and households still cannot get the credit they need to fuel the economy, he said.

"Although we have avoided the worst, difficult challenges still lie ahead," he told the gathering of bankers, academics, and economists. "We must work together to build on the gains already made to secure a sustained economic recovery."

Reviewing the last year's crisis, Bernanke outlined the many emergency measures the Fed and other regulators took to help ward off a global financial meltdown. He declined to acknowledge critics' arguments that regulators failed to detect signs of the crisis before it occurred - or that Wall Street bailouts sent a message that big companies that make reckless bets would be rescued with taxpayer money.

Some analysts said Bernanke appeared to be angling to keep his job for another term.

"The lack of any mea culpa suggests the Fed chairman wants to be reappointed," said Richard Yamarone, economist at Argus Research. "When you go on an interview, you never speak of your shortcomings."

President Obama will have to decide in the coming months whether to reappoint or replace Bernanke, whose term expires early next year.

The bulk of Bernanke's speech chronicled the extraordinary events of the last year.

Financial markets plunged starting in September and into October, nearly shutting down the flow of credit. The crisis felled storied Wall Street firms. The government took over mortgage giants Fannie Mae and Freddie Mac and insurance titan American International Group Inc.

Lehman Brothers failed. It filed for bankruptcy Sept. 15, the largest in corporate history, roiling markets worldwide.

The Fed swooped in with unprecedented emergency programs to fight the crisis.

"Without these speedy and forceful actions, last October's panic would likely have continued to intensify, more major firms would have failed, and the entire global financial system would have been at serious risk," Bernanke said.