For months, the Federal Reserve confidently suggested that an economic upturn was just around the corner.
Now, for the first time, Federal Reserve Chairman Alan Greenspan is saying that he has no clear idea when the economy's current stagnation might end: by spring, by Election Day, by early 1993 or perhaps not until later in the decade.
That new pessimism, evident in Greenspan's latest speeches and in recent comments to associates, suggests that the chairman of the nation's central bank now believes new efforts by the Federal Reserve to lower interest rates will not necessarily revive the economy, as lower interest rates have in the past. So additional measures might have to be tried, among them federal spending or tax cuts.
Until now, Greenspan has adamantly opposed such fiscal measures on the ground that they would run up the deficit, which he still does not want to do. But his concern that the economy is dead in the water appears to be overcoming some of his aversion to federal pump priming.
Above all, he is concerned that what he has called the "utterly unprecedented" debt burden of consumers and businesses will not be resolved in some standard, easily measurable way.
"Usually the Fed guys are optimistic as a matter of professional responsibility," said Robert Johnson, a managing director at Bankers Trust and a former Federal Reserve economist. "Mr. Greenspan's pessimism is quite candid, and it tells you how scary this recession is."
There was some speculation that the Fed may lower interest rates today when its policy-setting Federal Open Market Committee meets. In a report yesterday, the U.S. central bank said production at the nation's factories, mines and utilities slumped sharply in November.