Fed chief predicts U.S. economy to grow
Fed chief predicts U.S. economy to grow
SAN FRANCISCO (Reuter): Federal Reserve Chairman Alan Greenspan said Thursday he is confident that Americans' fears about their economic future will fade as they see the benefits of far-reaching changes in the economy.
In a speech to business leaders in San Francisco, Greenspan said that despite solid evidence of economic strength, there remained an "extraordinarily deep-rooted foreboding" among many Americans about the future.
He pointed to a recent Los Angeles Times survey showing that half of the people polled expected the next generation to face living standards lower than they are today.
Many economists have noted that in contrast to earlier economic recoveries, this time a sense of well-being has been slow to filter through to the man in the street despite statistics showing strong growth.
It was just such growth that led the Federal Reserve twice this year to raise interest rates, shocking financial markets and sending stocks and bonds down sharply.
Greenspan, who is closely watched for indications about the Federal Reserve's intentions on interest rates, made no reference to rates and took no questions.
Consumer confidence is important to the economy, because people are likely to hold off on major purchases if they are uncertain about the future. Consumer spending fuels about two- thirds of U.S. economic growth.
Greenspan sought to dispel Americans' fears about the economy, saying U.S. business is internationally competitive again. He said that rapid changes in the economy -- such as greater international competition, deregulation, technological advances and financial innovations -- naturally caused frictions and stress, at least temporarily.
But he said the frictions would eventually dissipate.
"I have no doubt that our economy will emerge healthier and be perceived of, in the longer run, as healthier," he said.
He said that as these trends became clear, fears among the public would fade and optimism would again dominate.