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US either in grip of recession, or near it: Greenspan

He points to recent data such as rise in joblessness in Dec

(NEW YORK) The United States economy is probably in a recession or about to slide into it, former US Federal Reserve chairman Alan Greenspan said in an interview with The Wall Street Journal.

The odds are ‘not overwhelming but they are marginally in that direction’, Mr Greenspan was quoted as saying in the interview, published yesterday.

‘The symptoms are clearly there. Recessions don’t happen smoothly. They are usually signalled by a discontinuity in the market place, and the data of recent weeks could very well be characterised in that manner.’

Last month, Mr Greenspan was reported as saying that he saw chances of a US economic recession at around 50 per cent, compared with his previous view of a 30 per cent chance. In this latest interview, he referred to a drop in the Institute for Supply Management’s purchasing managers index as well as the rise in unemployment in December, and said that the odds of a recession were still close to 50 per cent but ‘more likely higher than lower’.

He has been criticised for keeping the trendsetting federal funds rate at a low one per cent from June 2003 to June 2004, which some say contributed to a housing bubble that is now bursting.

 

Source: Reuters (Business Times 16 Jan 08)

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