Greenspan Notes Weak Recovery; Prospect Is Raised For Interest Rate Cut
The nation's recovery from recession has "turned demonstrably sluggish" in recent weeks, Federal Reserve Chairman Alan Greenspan said yesterday, raising the prospect that the central bank could cut interest rates again soon in an effort to give the economy a boost.</br></br>Using unusually blunt language, Greenspan told a University of Rhode Island business conference: "The economy is moving forward, but in the face of 50-mile-an-hour head winds... . From all the data that we have, it is evident that the economy is rising, but at a pace a good deal slower than one typically sees during the recovery out of a recession."</br></br>Greenspan's comments were similar to those from several senior Bush administration officials, such as Treasury Secretary Nicholas F. Brady, who have been urging the Fed to reduce interest rates. On Sunday, Brady said, "It is obvious the economy is not coming back as strongly as it should."</br></br>While Greenspan did not explain what economic indicators were worrying him the most, he is known to watch closely the monthly flow of new orders received by manufacturers and the weekly level of new claims for unemployment benefits filed with state employment offices across the country.</br></br>After a record surge in July, new orders fell moderately in August and did so again in September for long-lasting goods such as cars, steel and machine tools. The level of initial jobless claims, which rose to more than 500,000 a week during the recession, fell to a low of around 400,000 a week in July and has since risen again to about 420,000 to 430,000.