NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said the economy is experiencing a "substantial correction" in the housing market and that the Fed is closely watching how it plays out.

The decline in housing "was one of the major drags causing the economy to slow now," Bernanke said in response to a question after a speech he gave to the Economic Club of Washington Wednesday afternoon on the importance of preparing for the demographic changes in the world's largest economy.

Bernanke predicted the housing slowdown would take 1 point off growth in gross domestic product this year and possibly next. GDP is the broadest measure of the nation's economy.

The Fed was watching for "spillover" from the slowing housing sector to other areas of the economy, he said.

Two other areas of short-term economic worry consisted of concern about inflation and volatile prices in the energy sector, Bernanke added.

The Fed chief characterized the long-term outlook for the economy as "healthy" and "growing" but said particular care must be given to two issues: the effects of aging on the economy and the importance of skills, education and training both for children and adults in order for the United States to stay competitive in today's world.

When asked about the benefits of immigration to offset the effects of the aging, Bernanke said additional immigration wasn't "likely to solve our problem."

Bernanke was also asked for his impression of his post as Fed chairman now that he's been on the job for eight months.

He said it was "a sobering experience" but he was impressed by his staff, the Federal Reserve system and the economy as a whole.

The observations came after Bernanke's comments at a dinner in Washington last spring unnerved investors, sending stocks sinking when they were reported on television. (Full story).

(Correction: An earlier version of this story misspelled the name of the Economic Club. We regret the error).

------------------------------------------

Fed chief warns on Social Security, Medicare

Bernanke: Inflation under control