April 30 (Bloomberg) -- The U.S. economy is showing “glimmers of hope” that it is stabilizing, with the decline in housing slowing and consumer confidence rising, said Christina Romer, head of the White House’s Council of Economic Advisers.

“We currently expect the pace of the overall decline in the economy to moderate sharply over the next several months,” Romer told the Joint Economic Committee in Washington today. “We expect the economy to level out in the second half of the year and then begin to recover.”

Romer’s comments reflect recent data showing the worst recession in five decades may be abating. She cited increases in housing starts, rising builder and consumer confidence, slowing declines in house prices and surging stock prices since March.

Manufacturing surveys in recent weeks have shown a lessening in the pace of contraction, while a government report on gross domestic product yesterday showed consumer spending rose last quarter. The report, while showing the economy continued to shrink during the first quarter, also signaled that a drawdown in inventories may lead to increases in output.

Still, Romer indicated that lawmakers shouldn’t expect a sudden turnaround in an economy constrained by tight credit.

“In the short run, we are still in for more bad news,” Romer said, with unemployment probably increasing and GDP declining again in the second quarter after back-to-back declines of more than 6 percent. “Because the downturn has been so long and so severe, the recovery will almost surely take a long time.”

Spur Recovery

The administration’s $787 billion recovery plan, together with its efforts to capitalize banks and strengthen their balance sheets, will eventually spur a recovery, she said.

“We’ve never had countercyclical fiscal actions this bold before,” she said. The recovery bill amounts to 2.5 percent of GDP over each of the next two years, she said, compared with the 1.5 percent stimulus during Franklin D. Roosevelt’s first year in office in 1933 during the Great Depression.

Romer said the administration was weighing the potential costs to the U.S. economy from the spread of swine flu, while focusing on minimizing the threat of fatalities.

“Job No. 1 is do whatever it takes to make sure lives are saved,” she said in response to a lawmaker’s question.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net.

Last Updated: April 30, 2009 13:23 EDT