- The Washington Times - Friday, March 8, 2002

Federal Reserve Chairman Alan Greenspan said yesterday that recovery from the recession "is already well under way," his most upbeat assessment yet as signs of economic revival piled higher.
Mr. Greenspan's testimony before the Senate Banking, Housing and Urban Affairs Committee followed a stack of reports that consumers are spending more freely, businesses are boosting production and layoffs appear to be subsiding.
His remarks were more optimistic than comments last week, when he told a House panel that restraints on the economy "are starting to diminish."
At the White House, President Bush declined to answer what he called a "trick question" on whether the nation has emerged from recession. A panel of academic specialists officially makes that call, and presidents generally avoid the matter.
Mr. Greenspan repeated most of the comments he had made last week before the House panel. But he made a smattering of changes that gave his testimony a rosier tone.
"The recent evidence increasingly suggests that an economic expansion is already well under way, although an array of influences unique to this business cycle seems likely to moderate its speed," he said.
His reference to a moderate recovery was based on strong buying by consumers that continued through this recession, which officially began last March. Because their purchases never abated, people will have less pent-up demand than usual after a slump, which should make this recovery more modest, he said.
Consumer spending accounts for two-thirds of economic activity.
Later, in response to a senator's question, Mr. Greenspan was even clearer: "The economy appears to be turning."
Private economists said his remarks were unambiguously upbeat, and suggested he could be telegraphing that the Fed might raise interest rates later this year. They said it is all but certain that an increase will not occur at the Fed's next meeting on March 19.
An interest-rate increase would be the Fed's first since May 2000. It cut rates 11 times last year in a drive to revive the economy, but left them unchanged when policy-makers met in January.
Yesterday also produced a new economic report bearing more good news.
The Labor Department said new claims for unemployment insurance dipped by a seasonally adjusted 5,000 last week to 376,000, in the freshest evidence that companies are easing layoffs.
The agency also said worker productivity grew at an annual rate of 5.2 percent in the fourth quarter, outpacing the 3.5 percent previously reported.
But that gain in productivity the amount of output per hour of work seemed largely attributable to companies cutting back their payrolls in response to dipping sales.
Mr. Greenspan dismissed the productivity figure, calling it unlikely because the data used are frequently revised.
He repeated his belief that the nation's unemployment rate will keep rising because companies will be reluctant to quickly rehire laid-off workers.

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