A top U.S. Federal Reserve official says that the economic rebound was gaining strength but that the labor market would probably lag behind, meaning the central bank should be able to keep interest rates low for some time.

Federal Reserve Governor Ben Bernanke, in remarks to the U.S. Senate Banking Committee, pointed to robust consumer spending, a strong housing market and increases in business spending as signs of a strengthening economy and said economists’ estimates of gross domestic product growth approaching 4% in 2004 were “plausible.”

“After several false starts, the economy is showing signs of sustained recovery,” Bernanke said.

U.S. GDP grew at a 3.3% annualized rate in the second quarter and likely grew at a far stronger pace in the third quarter. But some economists worry the boost in the third quarter was only temporary, reflecting the impact of child tax-credit checks mailed in late summer.

Bernanke warned there were risks to the sustainability of the recovery.

Particularly worrisome to him was the labour market, which has continued to suffer, even though the latest recession ended in November 2001, according to the National Bureau of Economic Research.

“Until the job market improves, this recovery will not feel like a recovery to most Americans,” Bernanke said.