Greenspan reports recession is over

July 17, 1991|By New York Times News Service

WASHINGTON -- Alan Greenspan, nominated last week to another four-year term as chairman of the Federal Reserve Board, yesterday gave Congress one of the most optimistic assessments of the economy he has offered in years.

He proclaimed the recession over, reported "promising signs of a slowing in inflation," predicted "marked progress on the deficit" and said he expected the debt of individuals and companies to flatten out after the surge in the 1980s.

Mr. Greenspan told a House subcommittee, "At this stage, we are well on the path of actually achieving the type of goals which we've setout to achieve: a solid economic recovery with the unemployment rate moving down to its lowest sustainable, long-term rate, with growth at or close to its maximum, long-term sustainable pace, with inflation wholly under control."

However, not all of Mr. Greenspan's news was glowing. For example, he said, "Convincing evidence of a dynamic expansion is still rather limited." He added that "we must remain alert to the chance that the recovery could be muted or could even falter."

He also characterized the Fed's current policy as "a posture of watchful waiting," presumably meaning that changes in interest rates are not in the offing soon. TheFed has not touched the rates it controls since it last cut them in April.

Mr. Greenspan appeared before the House Banking Committee's Subcommittee on Domestic Monetary Policy to testify, as required by law every six months, about the state of the economy and the outlook for monetary policy. His economic forecasts contained no surprises.

He said that he and other Fed officials expected the gross national product to rise between three-quarters of a percent and 1 percent this year, inflation as measured by the Consumer Price Index to rise 3 1/4 percent to 3 3/4 percent, and the civilian unemployment rate in the fourth quarter to be 6 3/4 percent to 7 percent.

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