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Odds of US recession clearly rising: Greenspan

This is due to slowing rate of economic growth, says ex-Fed chief

(NEW YORK) The odds of a recession in the United States are ‘clearly rising’ due to the slowing rate of economic growth, former Federal Reserve chairman Alan Greenspan said.

‘We are getting close to stall speed … and we are far more vulnerable at levels where growth is so slow than we would be otherwise,’ he said in an interview with National Public Radio on Thursday.

Asked about the possibility of recession, the former Fed chief said: ‘It’s too soon to say, but the odds are clearly rising.’ Earlier on Thursday, Mr Greenspan said he raised his view of chances of a US recession to 50 per cent from 30 per cent, according to CNBC television.

The US economy grew 4.9 per cent in the third quarter in real terms, but is expected to slow sharply in coming quarters.

The economy will barely grow this quarter and have a lacklustre 2008, according to forecasts by Lehman Brothers delivered on Thursday.

Lehman expects the US economy to post a sluggish growth rate of just 0.4 per cent in the final three months of this year, said the firm’s chief financial officer, Erin Callan. For full-year 2008, the economy is expected to grow just 1.8 per cent, Mr Callan said in a conference call.

 

Source: Reuters (Business Times 15 Dec 07)

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