Fed Chief Sees Improvement In Economic Growth, Inflation

The nation’s economy is looking better all the time with the prospects for economic growth brighter and inflation pressures declining, Federal Reserve Chairman Alan Greenspan told Congress Friday.

“On the whole, the near-term prospects for the U.S. economy have improved in recent months,” Greenspan testified before the Senate Banking Committee.

But his upbeat assessment failed to spur Wall Street. At one point Friday the Dow Jones industrial average of 30 blue-chip stocks was down as much as 38 points, but it managed to close down just 3.25 at 4,764.15.

Greenspan cited recent gains in industrial production, home sales, retail spending and employment as favorable signs that the economy would perform better in the months ahead.

Overall economic growth slowed to an anemic annual rate of 1.1 percent in the spring, the worst showing since the recession year of 1991.

Greenspan said the pickup in growth since the spring was coming without any increase in inflation. Instead, inflationary pressures are lower now than at the start of 1995, a fact he credited to the economic slowdown that occurred after the central bank raised interest rates seven times over a year.

“Fortunately, economic growth has slowed appreciably this year, inflation risks have receded, and, as a consequence, the threat of a severe recession has declined,” Greenspan said.