Greenspan Lays Odds On U.S. Recession
'One-Third Probability' in '07, Former Fed Chief Says
By Craig TorresBloomberg NewsWednesday, March 7, 2007; Page D01
Former Federal Reserve Chairman Alan Greenspan said yesterday that there is a "one-third probability" of a U.S. recession this year and that the current economic expansion won't have the staying power of its decade-long predecessor.
"We are in the sixth year of a recovery; imbalances can emerge as a result," Greenspan said in an interview at his District office. "The historically normal business cycle is much shorter" than a decade and is likely to be this time, he said.
Greenspan's outlook contrasts with the prediction of his successor, Ben S. Bernanke, who told Congress last week that the economy might strengthen this year. Bernanke's upbeat assessment helped steady stock markets on Feb. 28 after a plunge the day before that some traders attributed partly to Greenspan's musing that a recession could not be ruled out.
"It is possible that we can have a recession at the end of this year," said Greenspan, who ran the central bank for 18 years until January 2006. Bernanke declined comment.
Little more than a year after leaving the central bank, Greenspan, 81, is returning to economic forecasting, which he did before entering the government in 1974. He isn't trying to predict a number for gross domestic product or inflation; instead, he's trying to capture trends and when they might change.
Private-sector economists and policymakers are predicting that the expansion, which began in 2001, will continue. The Fed expects the economy to grow 2.5 to 3 percent this year, and 2.75 to 3 percent next year, according to forecasts presented to Congress last month.
Greenspan said he had been careful to avoid making life difficult for his successor.
more
No comments:
Post a Comment