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Greenspan Warns Against Economic Protectionist Legislation - 2004-01-26

Federal Reserve Chairman Alan Greenspan says Congress must resist pressure to pass tariffs and other protectionist legislation in a misguided attempt to protect U.S. jobs.

The top U.S. central banker said in a Monday speech that the U.S. economy is going through a massive job-turnover process that is painful for workers caught in the transition. He says this highlights the need for job-retraining for displaced workers.

Mr. Greenspan says the U.S. economy has been able to generate jobs in cutting-edge industries to replace work lost to low-wage nations in the past.

Some 2.8 million U.S. manufacturing jobs have been lost over the last three and a half years, making unemployment a significant political issue in the presidential election.

The U.S. economy is rebounding from a slump, but it is creating jobs at a slower pace than in previous economic recoveries.

Economists say the current recovery is fueled in part by low interest rates, which are set by Mr. Greenspan and other Federal Reserve officials.

They are set to meet Tuesday and Wednesday to consider interest rate policy. Most analysts say the Fed will not raise interest rates when they announce their decision on Wednesday.