Dec. 14 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the risk of a U.S. recession is increasing and that economic growth is ``getting close to stall speed.''

While it's too soon to say a recession is coming, ``the odds are clearly rising,'' he said in an interview with National Public Radio yesterday. ``The economy at this level of growth is subject to all sorts of potential shocks.''

The U.S. economic expansion, which began in 2001, is cooling after a third-quarter surge as the housing slump enters its third year and consumer spending slows. Martin Feldstein, head of the National Bureau of Economic Research, which is responsible for dating U.S. economic cycles, and former Treasury Secretary Lawrence Summers are among those also raising the prospect of a downturn.

Greenspan, 81, left the Fed in January last year after almost two decades at the helm of the world's most powerful central bank. He has returned to his role as a private sector economic forecaster, speaking at conferences and to groups of bankers and investors. On Nov. 7, he told a conference in Sao Paolo that the chances of a recession were ``less than 50-50.''

Predictions that the six-year expansion is coming to an end have been countered by Allan Meltzer, professor of political economy at Carnegie Mellon University in Pittsburgh. Meltzer's case was strengthened yesterday by a Commerce Department report showing retail sales rose 1.2 percent in November, twice as much as economists anticipated.

Meltzer's Outlook

``We should still see reasonable sales growth and no recession,'' Meltzer, also a Fed historian, said in a telephone interview after the report. ``It's quite reasonable to expect high energy prices will slow business investment and, eventually, consumer spending, but people are working, the unemployment rate is low and Christmas is Christmas.''

Greenspan defended his record as a policy maker in a Wall Street Journal editorial on Dec. 12, saying that lowering the Fed's target interest rate to 1 percent in 2003 didn't have a major impact on demand for homes with adjustable-rate mortgages. Meltzer said later the same day that the former chairman ``lets himself off much too easy.''

Rising foreclosures triggered a collapse in demand for assets backed by U.S. subprime mortgages that roiled markets from Sydney to New York the past four months. The credit squeeze that followed forced the Fed, now led by Ben S. Bernanke, to reduce interest rates and join central banks in Europe to pump billions of dollars into the banking system.

Rate Cut

Fed policy makers lowered their benchmark rate by a quarter-point on Dec. 11 to 4.25 percent, disappointing some investors who had urged a half-point reduction. Officials cited ``uncertainty surrounding the outlook'' for both growth and inflation.

Government figures today showed inflation accelerated last month, reinforcing the Fed's concern that price increases remain a risk. The consumer price index increased 0.8 percent in November, up from 0.3 percent the previous month, the Labor Department said today in Washington.

The housing crisis eventually ``has to defuse itself,'' Greenspan said in the NPR interview, which will be broadcast today. CNBC reported yesterday that Greenspan raised his chances of a recession to 50 percent, citing an unidentified person who attended a lunch with Greenspan in Washington.

The economy's slow growth makes it especially vulnerable to shocks, he told NPR.

`More Vulnerable'

``We are far more vulnerable at levels where growth is so slow than we would be otherwise,'' he said. ``If somebody has an immune system that is not working very well, they are subject to all sorts of diseases.''

The Fed, European Central Bank and three other central banks moved in concert on Dec. 12 to alleviate a credit squeeze that's threatening global economic growth.

In the biggest act of international economic cooperation since the Sept. 11 terrorist attacks, the Fed said it will make as much as $24 billion available to the ECB and Swiss National Bank to increase the supply of dollars in Europe, and plans four auctions that will increase cash in the U.S.

Most U.S. stocks dropped yesterday, led by financial shares, on concern that central banks won't relieve gridlock in credit markets. Overseas, the interest rates banks charge each other for short-term loans in Europe failed to decline from the highest levels in seven years.

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

Last Updated: December 14, 2007 10:56 EST