Greenspan: Credit Crunch Dims Recovery
The economic recovery is continuing but the difficulty borrowers are having getting loans at troubled U.S. banks is keeping its pace subdued, Federal Reserve Chairman Alan Greenspan told President Bush and top administration officials at a White House meeting yesterday.</br></br>Bush said the meeting of the administration's Economic Policy Council, the second this week, was called to discuss economic "initiatives and where we stand." The sessions came as new polling results showed that the weakened state of the U.S. economy is hurting Bush's standing with the American public.</br></br>Afterward, White House spokesman Marlin Fitzwater said Greenspan expressed confidence that "the underlying factors are strong and we are coming out of the recession. ... The credit {crunch} problem was identified as one of the biggest obstacles at this point at getting responsiveness in the economy.</br></br>"The president is particularly concerned that bank examiners not be providing a chilling effect on the availability of money at a time when interest rates are going down," he said.</br></br>Meanwhile, the Commerce Department issued another report showing the erratic month-to-month pattern the economy seems to be following. It said Americans' disposable personal income rose 0.2 percent faster than inflation last month following a 0.1 percent dip in July. Consumer spending, on the other hand, fell by an inflation-adjusted 0.2 percent after rising strongly in both June and July.