Greenspan Gives Upbeat Report To Congress
Federal Reserve Chairman Alan Greenspan said yesterday that the U.S. economy has "picked up" noticeably in recent weeks and that businesses are regaining their ability to raise prices.</br></br>"Things are changing" since economic growth slumped in mid- winter, Greenspan said during a Senate Banking Committee hearing, in his most upbeat public comments about the economy since February. Citing recent upticks in employment, vehicle sales and new orders for big-ticket consumer items, he said, "It's fairly apparent from the data since, that things have picked up."</br></br>Greenspan said nothing about how such progress would affect the Fed's policy on interest rates. But stock and bond prices fell sharply after his remarks apparently convinced many investors that the central bank may move soon, perhaps as early as this summer, to raise its target for a key overnight rate, which influences many other borrowing costs for households and businesses.</br></br>Investors also may have sold assets in anticipation of Greenspan's scheduled testimony today before the Joint Economic Committee, in which he plans to elaborate on his view of the economic situation.</br></br>Greenspan's remarks yesterday came just two weeks before the Fed's policymaking group, the Federal Open Market Committee, meets to determine interest rate policy. The markets' reaction yesterday reflected jitters among investors who know that Greenspan might use his testimony today to prepare the public for any significant change he may intend.