Fed chairman says there is no 'housing bubble'

REAL ESTATE WATCH

April 13, 2003|By Bloomberg News

The U.S. economy isn't suffering from a housing bubble, Federal Reserve Chairman Alan Greenspan said last week.

Greenspan, answering questions after a speech at the Ronald Reagan Presidential Library and Museum, said that even if price increases do slow, it's "doubtful" that such a slowing would cause major problems in the economy.

"I personally don't think that there is a housing bubble," Greenspan said at the Reagan library and museum in Simi Valley, Calif.

"I don't deny that, overall, after running up quite a good deal, that the rate of increase in housing prices could slow very dramatically and even decline modestly, but that's not likely to be a major negative force. It's the removal of a positive force," he said.

Consumer spending has continued to rise even as the U.S. economy slowed, partly because people have received extra cash by refinancing their homes at lower interest rates.

"I would be very doubtful about a major problem with the economy as a result of some retrenchment in the housing market," Greenspan said.

The U.S. economy is more resilient than it was three decades ago, Greenspan said, and so it can rebound more easily after the end of the war with Iraq.

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