"We are looking for moderate growth in the economy going forward," he told a House committee Wednesday.

The economy was clearly slowing in the last three months of 2006 to a 2.2 percent revised Commerce Department estimate, down from its earlier 3.5 percent preliminary figure. But that was due in large part to the cyclical declines in the housing markets and in manufacturing. I think both of these sectors will pick up in the last half of this year.

The housing sector has been the boogeyman of the U.S. economy. But its negative fallout has been exaggerated. Predictions of a housing bubble bursting, bringing down the U.S. economy, have not borne out.

"We are now well into the contraction period, and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," Greenspan also said last week.

Yes, new home sales were down sharply, in many cases priced out of the market's lower selling range, but Americans were still buying homes. Existing home sales rose 3 percent in January, as declining real-estate prices have begun to bring new buyers back into the market.

Meantime, the economy was still growing within the 3 percent range for the past year and Bernanke sees growth picking up, especially in the last half of the year.

Consumer spending is decent, wages have been rising, U.S. exports are stronger than ever and for the past eight months we have been in a global bull market that shows no inherent signs of slowing down over the longer term. Markets are self-correcting, pausing to catch their breath before climbing higher. All that profit-taking last week steered a lot of money to the sidelines, but it will be returning to the equities markets to pick up cheaper stocks that still have much room to grow.