Fed Chairman Sees Signs Economy Is Stabilizing: Greenspan Says Gulf Will Have Major Iinpac
There are preliminary signs that the U.S. economy is beginning to stabilize after its sharp fourth-quarter plunge into recession, Federal Reserve Chairman Alan Greenspan said yesterday.</br></br>If those signs are right, ÛÏthe worst is behind us," Greenspan said, although the Persian Gulf crisis still hangs over the economy.</br></br>The Fed chairman, speaking to Washington area businessmen at a Washington Post lunch, said it also appears that bankers are becoming more willing to make loans in a normal wayÛÓwithout recently imposed constraints and requirementsÛÓ which could spell an end to the credit crunch that Greenspan said has been a major factor in causing the recession.</br></br>Greenspan, for the first time labeling the slump as a recession, said the economy declined at a 2 percent to 4 percent annual rate in the final three months of last year. Even if the worst is now over, the current quarter will still show a further drop in the gross national product, adjusted for inflation, he said.</br></br>He acknowledged that what happens to the economies of the United States and the rest of the world ÛÏfor the rest of this year and nextÛ will depend significantly on whether there is a war with Iraq and how long it lasts.