Greenspan: US in recession, "too soon to tell" when crisis ends

Business Materials 6 May 2008 00:59 (UTC +04:00)

Former Federal Reserve chairman Alan Greenspan said the United States was in a recession that could potentially last until the end of the year, in an interview with Bloomberg News on Monday, the dpa reported.

Greenspan said it was "too soon to tell" whether the mortgage market crisis, which has limited the availability of credit and sparked a wider economic slowdown, may be coming to an end.

"We are clearly receding," said Greenspan, but added that the current slowdown appeared milder than past cases. The last US recession was in 2001.

US economic growth for the first quarter of the year was reported at 0.6 per cent in an initial government estimate last week, the same rate as the last three months of 2007. Unemployment dropped to 5 per cent in April as a less-than-expected 20,000 jobs were lost in the month.

"This is an awfully pale recession at the moment. The declines in employment have not been as big as you'd expect to see," Greenspan said.

The US central bank, now led by Ben Bernanke, cut its benchmark interest rate for the seventh straight time last week to 2 per cent, down from 5.25 per cent in September.

The Fed has not forecast a contraction of the US economy, though Bernanke earlier this year acknowledged a recession was "possible."