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Greenspan: US Economic Slowdown Not Over
US Federal Reserve Chairman Alan Greenspan said on Wednesday that his country's economic slowdown which began in the second half of last year is not over yet.
"Although the sources of long-term strength of our economy remain in place, excesses built up in 1999 and early 2000 have engendered a retrenchment that has yet to run its full course," Greenspan said at a testimony to the Financial Services Committee of US House of Representatives.
The chairman blamed much of the economy's weakness on efforts by US businesses to cut back quickly on production in the face of falling sales.
"This retrenchment has been prompt, in part because new technologies have enabled businesses to respond more rapidly to emerging excesses," he said.
"Accordingly, to foster financial conditions conducive to the economy's realizing its long-term strengths, the Federal Reserve has quickened the pace of adjustment of its policy," the chairman said.
Analysts interpreted Greenspan's comments as a clear signal that the Federal Reserve, which already reduced interest rates by a full percentage point in January, is ready to do more to prevent the slowing economy from skidding into a recession.
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