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Greenspan: US Still Trying to Recover From Slight Recession - 2002-11-20

U.S. Federal Reserve Chairman Alan Greenspan says the United States is still trying to emerge from a slight recession. America's central banker says the U.S. economy has weathered its unexpected problems well, mainly because of its flexibility and innovation.

Alan Greenspan says the U.S. economy is slowly picking up steam. Ironically, he says, the reason it's taking so long is because the recession hasn't been that bad. "We had very little in the way of contraction. So if you don't have much contraction, you don't have much traction (pull) going forward," he said.

Mr. Greenspan told a meeting of the Council on Foreign Relations that the country's ability to remain buoyant despite the September 11th terrorist attacks last year and an eight-trillion-dollar loss in stock market wealth shows modern economies can withstand unexpected shock better than ever.

Mr. Greenspan says that's because recent financial innovations have given lenders the ability to spread credit risk and borrowers a wide range of options to raise capital. But the Federal Reserve chairman says the U.S. effort to ease government regulation throughout the past 25 years is what has set the United States apart from other countries.

"It is certainly the case that if you look across the spectrum of the globe, there is an awful lot of structural rigidity out there which is impeding recovery," he said. "I think it is clearly less in the United States. But there is no doubt that certainly in Europe and Japan there is (are) fairly extensive structural inhibitions to growth. They differ by country and they differ by economy."

Mr. Greenspan says structural reform is the only long-term solution to the problem.

And he says a successful market economy is based on ethics and trust. That's why, he says, the recent string of corporate ethics scandals in the United States is another reason why the economy is not moving forward as quickly as people would like.