Financial markets are starting to work better, Federal Reserve Chairman Ben S. Bernanke said yesterday, but they are still not functioning normally despite Fed intervention. Meanwhile, new data on retail sales suggest that American consumers, though stressed, are not cutting their spending in a dramatic way.

The pieces of news reflect an apparent easing of the financial crisis in recent weeks. Money is flowing again through markets for debt that had seized up in March. And data on the economy, including yesterday's, suggest that the economic downturn is, so far, at least, not the severe recession many had feared.

Bernanke, in a speech delivered by satellite to a conference of the Atlanta Fed in Sea Island, Ga., noted that safe mortgage-backed securities are now trading at more normal prices and that companies that borrow money are able to get more favorable interest rates. Those are indicators that some healing is occurring in the complex network of debt markets that grease the gears of a modern economy.

But Bernanke, taking a more dour tone than Treasury Secretary Henry M. Paulson Jr. and some Wall Street executives about the prognosis for an end to the financial crisis, said that "conditions in financial markets remain far from normal."

"Ultimately, market participants themselves must address the fundamental sources of financial strains," Bernanke said, "through de-leveraging, raising new capital and improving risk management, and this process is likely to take some time."

Markets for packages of loans "remain moribund," he said. And he noted that the rates at which banks lend to each other are still "abnormally high," a reflection of banks' desire to hoard cash.

"He's saying that it ain't over," said Doug Roberts, chief investment strategist at Channel Capital Research. "He's trying to make very, very clear that this is a continuing issue that will take a while to resolve."

Bernanke was not trying to signal any new direction in policy, however. The Fed, at its last policymaking meeting, on April 30, gave signs that it was not inclined to cut interest rates further anytime soon. Economic data in recent weeks, and the improved conditions in financial markets, have supported that view. Options markets now price in an 81 percent chance that the Fed will not make any change to the federal funds rate at its June 24-25 meeting.

Part of the reason that financial markets have been healing and that the Fed is likely to refrain from further interest rate cuts is that the economy is not performing as badly as had been suggested by economists' most dire forecasts over the winter. That was underscored yesterday in a report on April retail sales.

The Commerce Department said April sales declined 0.2 percent from March. But when the volatile motor-vehicle segment is excluded, retail sales rose 0.5 percent. Sales were solid in most categories of spending, excluding automobiles, gasoline and furniture.

"The April retail sales figures overall were not too bad in view of widespread reports of extremely grumpy consumer sentiment," Brian Bethune, an economist with consulting firm Global Insight, said in a report. "Overall, consumer spending continues to chug forward, albeit at very slow rates."