US could face mild recession: Greenspan - Emirates24|7

US could face mild recession: Greenspan

 

US economic data suggests the world's biggest economy could face a mild recession, former Federal Reserve chairman Alan Greenspan was quoted as telling Asian investors on Wednesday.

"He said that the data coming out of the U.S. so far suggests a mild recession. The risk is really on the housing side," a participant quoted Greenspan as telling a private Deutsche Bank event.

The former Fed chairman spoke to the meeting in Singapore via videolink from Washington.

Greenspan, who was quoted as saying earlier this month that the US had fallen into an "awfully pale recession", also told the investor meeting that the credit crisis would end when home prices in the United States begin to stabilise, members of the audience said.

"When home prices stabilise that would mark the end of the credit crisis," the participant quoted Greenspan as saying.

"The last part of liquidation will only occur in early 2009, but he argued that it is likely home prices could well stabilise before that," the participant, who declined to be identified, added.

The US economy is reeling from a housing-led slowdown. Some analysts are convinced the economy is already in a recession despite a 0.6 per cent annualised growth rate in the first quarter of 2008.

The Fed has cut it's key overnight lending rate by 3.25 percentage points to 2.0 per cent since mid-September in a bid to cushion the broader economy from the housing downturn and credit crisis.

Greenspan also said that global price pressures could remain firm because the effect of China's cheap exports is waning.

"We are entering a period where the disinflationary pressure from the exports of China have bottomed out," the participant quoted Greenspan as saying.

"Low cost labour in China probably reached its peak in late 2006 and early 2006. We are beginning to see gradually rising inflationary pressures, which would be probably subdued during the current period of slowdown, but will surely re-emerge when the economy begins to pickup," he quoted Greenspan as saying. 

 

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