Newspaper article THE JOURNAL RECORD

Greenspan Foresees End of Recession, Weak Rebound

Newspaper article THE JOURNAL RECORD

Greenspan Foresees End of Recession, Weak Rebound

Article excerpt

WASHINGTON (AP) -- Cautiously upbeat, Federal Reserve Chairman Alan Greenspan said Wednesday there are mounting signs the recession is ending but the rebound may be weaker than usual.

The road to recovery, Greenspan said, looks promising for a country that has suffered through recession for almost a year and was badly jolted by the Sept. 11 attacks.

"Although there are ample reasons to be cautious about the economic outlook, the recuperative powers of the U.S. economy ....have been remarkable," Greenspan said in his twice-a-year economic report card to Congress.

Greenspan said he was encouraged that consumers, the lifeblood of the economy, continued to spend in the past few months, particularly on big-ticket items including automobiles and houses.

Other promising signs: Businesses are getting rid of excess stocks of unsold goods, something that needs to be done before companies can crank up production in the future; and businesses are beginning to invest more in high-tech equipment, one of the areas especially hard hit as companies cut capital spending to cope with the slump.

Even so, the Federal Reserve expects the economy this year will grow by between 2.5 percent to 3 percent, when measured from the fourth quarter of last year. That would represent about half the pace of the normal rebound from a recession.

Greenspan said he is looking for a subdued recovery because consumer spending held up remarkably well last year, giving it less room to expand this year.

Moreover, expectations that the nation's unemployment rate -- now at 5.6 percent -- will rise in the coming months because companies will be reluctant to quickly hire back laid-off workers also could hold down spending, he added.

Still, hopeful signals about the economy's direction led the Fed last month to leave interest rates unchanged. …

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