Economy worse, Fed chief admits Keeps mum on intentions for interest rates.

October 29, 1991|By New York Times

WASHINGTON -- In his gloomiest assessment since last winter, Alan Greenspan, the chairman of the Federal Reserve Board, says that the national economy has taken a turn for the worse.

The economy is still growing slightly, Greenspan yesterday told a group of business executives in Providence, R.I., but "in recent weeks, it's turned demonstrably sluggish."

Greenspan, however, gave no indication even indirectly of what his intentions might be on interest rates. He has recently been under increasing pressure from Treasury Secretary Nicholas F. Brady and others in the administration to drive rates lower.

The Federal Open Market Committee, the policy making arm of the Fed, meets next on Nov. 5.

In July, when he gave Congress his official midyear review of the state of the economy, Greenspan proclaimed the recession over, reported signs that inflation was slowing, predicted progress on the federal budget deficit and was otherwise remarkably optimistic.

Yesterday's speech, which he delivered from notes, had a much different tone.

The "signs of spark" that could be observed in the economy in the spring and early summer, Greenspan said, were no longer apparent.

In addition to not tipping his hand on interest rates, Greenspan did not say whether other steps should be taken to lift the economy. Many lawmakers of both parties have offered tax-cut proposals in recent days, saying that a cut was necessary to generate a surge in the economy.

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