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Greenspan upbeat
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THE US economy is in a “retrenchment" phase, but not a recession, Federal Reserve Chairman Alan Greenspan told lawmakers on Tuesday.
Greenspan said the economy faces considerable “downside risks" as it cools from last year's red-hot pace, but predicted an end to the current sluggishness, with new technologies helping US businesses become more productive and helping to grow the economy by two to 2.5 per cent in 2001.
“The prospects for sustaining strong advances in productivity in the years ahead remain favourable," he told the Senate Banking Committee in his semi-annual presentation of the monetary report to the US Congress.
Asked if the US economy had entered a recession, Greenspan replied, “at this moment, we (have) not".
Greenspan declined to engage in debate over the merits of the 1.6 trillion-dollar tax cut proposed by President George W Bush, but brushed aside suggestions by administration officials that the cuts could avert a recession.
There is a low probability any recession would be a long one, he said, painting a picture of an economy that has tripped a bit compared to last year's high-flying pace.
The Fed chairman said he sees considerable “signs of softness" in the economy that could affect the recovery.
Analysts suggested Greenspan's remarks were a precursor to future rate cuts.(SD-Agencies)
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