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| Greenspan negative on US economy |
| The former chairman of the US central bank Alan Greenspan has warned that US economic growth has stalled and a quick recovery is not likely.
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| UNITED STATES OF AMERICA
, 26-February-2008
0:56:7 AM |
| As of right now US economic growth is at zero," he said, adding the longer it stayed this way the greater the risk of a deep recession.
Wall Street giants Goldman Sachs and Merrill Lynch have both forecast that the US economy will contract in 2008.
The US Federal Reserve has said 2008 growth will be between 1.3% and 2%.
The forecast, made last week, was half a percent lower than the Fed's previous estimation.
The gloomy outlook was blamed on falling house prices, reduced bank lending, turmoil in the financial markets and higher oil prices.
More gloom?
Mr Greenspan also predicted that booming oil prices, which reached a record of more than $101 last week would keep rising and that the US housing market would see more misery before the tide turned.
On Monday, figures from the National Association of Realtors showed US house prices fell 4.6% to $201,100 (£106,691), while inventories rose.
This adds to the drumbeat of bad news for consumers, including higher unemployment, more expensive fuel costs and higher credit card repayment costs and raises worries about their ability to spend and prop up the world's largest economy.
Increased globalisation of trade could offset a sharp downturn in consumer spending and "facilitate the absorption of shocks in the US," Mr Greenspan said.
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