Accessibility links

Greenspan: US May Restrain Trade Deficit


The head of the U.S. central bank says a variety of factors, from a weaker dollar to tougher budget discipline in Congress, may help restrain the rapid growth in the nation's trade deficit.

In remarks prepared for a speech in London, Federal Reserve Chairman Alan Greenspan cautioned that the unprecedented level of economic interaction between countries makes it difficult to predict what will happen to the U.S. trade deficit.

Economists say that to finance the trade gap, the United States depends on the willingness of foreigners to lend money to the country through investments like stocks and bonds.

Analysts worry that the declining dollar might prompt investors to abruptly sell their stocks, which could push the dollar down further and force interest rates up. That could slow the U.S. economy and hurt nations that export to the huge U.S. market.


Some information for this report provided by AFP and AP.

XS
SM
MD
LG