Greenspan Says U.S. Economic Recovery 'Well Under Way'

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Last updated at: (Beijing Time) Friday, March 08, 2002

Greenspan Says U.S. Economic Recovery 'Well Under Way'

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U.S. Federal Reserve Chairman Alan Greenspan on Thursday declared the U.S. recession over and said an expansion was already ``well under way'' -- a brighter economic picture than he painted just a week ago.

The Fed chief told the Senate Banking Committee, in a rare and unexpected revision to his formal semiannual testimony to a House of Representatives panel on Feb. 27, that the upbeat economic news of the past few days was encouraging.

But he retained a note of caution, telling lawmakers during questioning the recovery would ``almost certainly'' not log the growth rates of rebounds from past recessions -- which he said typically averaged around 7 percent. He also said business spending was a cause for concern.

``The recent evidence increasingly suggests that an economic expansion is already well under way, although an array of influences unique to this business cycle seems likely to moderate its speed,'' Greenspan said.

The Fed chairman's increased optimism signaled to many economists that the central bank could use its meeting on March 19 to shift its public stance on economic risks -- saying they are balanced between economic weakness and rising inflation rather than weighted toward the threat of softness.

Such an shift could preface an eventual rise in interest rates from current 40-year lows, an increase some analysts say could come as soon as mid-year.

Only a week ago, Greenspan said U.S. economic activity was just ``beginning to firm,'' while also reeling off caveats about consumer spending and business investment.

In his testimony Thursday, the Fed chief was clearly more decided in his assessment that the U.S. recession, which began last March, had ended. Greenspan said he saw ``encouraging'' signs in recent days that final demand was strengthening, while warning that ``the dimensions of the pickup remain uncertain.''

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