Fed boss: Recession near end

Rebound expected to be modest

NEWS SERVICES, OLYMPIAN STAFF

WASHINGTON -- Cautiously upbeat, Federal Reserve Chairman Alan Greenspan said Wednesday there are mounting signs of an end to what has turned out to be one of the country's mildest recessions. He said Americans shouldn't anticipate a robust recovery.

This was an unusual recession, he said, in that consumers kept buying throughout. So their spending probably won't rise as quickly as in past rebounds, and total economic growth this year should be about half what it has averaged during the first year of previous recoveries.

The "recuperative powers of the U.S. economy ... have been remarkable," Greenspan said, given the severe blow delivered by September's attack.

State's recovery

Washington state's economic recovery will probably lag behind the rest of the nation's because of heavy job losses within the aerospace industry, according to state economic analysts.

The Boeing Co. is expected to complete a series of layoffs totaling 30,000 by the middle of this year. Most of the job cuts will be in the Puget Sound area.

Washington's economy is expected to bounce back in 2003, according to the state Office of the Forecast Council.

Nationally, Greenspan said businesses will be boosting production in coming months providing the fuel to lift the country out of its downturn.

Greenspan said the fact that consumer spending, helped by low mortgage rates and attractive auto financing offers, had stayed strong in the months immediately following the attacks had helped make the recession a mild one.

More investments

Another promising sign: Businesses are beginning to invest more in high-tech equipment, one of the areas especially hard hit as companies cut capital spending to cope with the slump, Greenspan said.

Even so, the Federal Reserve expects the economy this year will grow by between 2.5 percent to 3 percent, when measured from the fourth quarter of last year. That would represent about half the pace of the normal rebound from a recession.

The Fed's forecast also saw unemployment, now at 5.6 percent, continuing to rise in the coming months because companies will be reluctant to quickly hire back laid-off workers also could hold down spending, he added.

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On the Net:

Federal Reserve: http://www.federalreserve.gov

On the Web:

- Alan Greenspan biography

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