Newspaper article The Evening Standard (London, England)

Awaiting the Clear-Sighted View from Greenspan

Newspaper article The Evening Standard (London, England)

Awaiting the Clear-Sighted View from Greenspan

Article excerpt


EXCEPT for a surprise visit to Treasury Secretary Paul O'Neill's Press-attended birthday bash in early December and a photo opportunity with President Bush, recent public sightings of Alan Greenspan have been rare.

The chairman of the US Federal Reserve has not made extensive comments about the state of the American economy since autumn, so his appearances today and tomorrow at two separate conferences in California have the potential to generate market upheaval.

His speech tomorrow on the economy, especially, should provide clues as to whether the Fed shares the prevailing view on Wall Street that the worst is over.

Greenspan is a master of verbal disguise when he does not want to tip his hand, but at times like this, when markets are searching for direction, he usually provides it.

Fed officials who have spoken this week have taken a more bearish view of the economy than Wall Street - and the public opinions of Greenspan's fellow policymakers are traditionally consistent with his.

Forward-looking financial indicators, such as money growth, share prices and the yield curve, have pointed to recovery in the US for several months but the evidence of non-financial economic improvement is still scant. Initial claims for unemployment benefit, a usually reliable indicator of economic shifts, dropped below 400,000 three weeks in a row, which was encouraging, but then bounced higher.

This week's data, due today, is expected to show initial claims remain relatively high. So far, the inventory-to-sales ratio, purchasing managers' orders and other critical measures of the real-time US economy have only marginally improved, if at all.

The recovery may be coming but is it in sight yet? Greenspan's view is generally clearer than Wall Street's because it is less clouded by wishful thinking. …

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