Greenspan cites US budget deficit as part of recession risk
February 26, 2007
In a satellite presentation to a business conference in Hong Kong, former US Federal Reserve chairman Alan Greenspan said that while it is difficult to predict conditions that far out, he cannot rule out a recession in the US economy by the end of 2007. While he said he has not seen any ripples in other sectors from the contraction on the US housing market, the facts that the economy has been expanding since 2001 and profit margins are beginning to stabilize are signs that the economic cycle is ending.
Mr. Greenspan admitted that most analysts do not agree that a recession is in the cards, especially after the US economy grew at a rate of 3.5 percent in the fourth quarter of 2006. However, a survey issued Monday by the National Association for Business Economics says that analysts predict that the economy will grow by 2.7 percent in 2007. That would be slowest rise since 2002.
One concern cited by Mr. Greenspan was the US budget deficit. This continues to be a concern, he said, despite the fact that it was at its lowest level in four years in 2006. Mr. Greenspan made his remarks to the Very GC Global Business Insights 2007 Conference.