Greenspan Throws a Wet Blanket on Hopes for Growth Breakout

Updated on
Former Federal Reserve Chairman Alan Greenspan
Alan Greenspan, former Federal Reserve chairman, speaks following a Bloomberg Television interview in Washington, D.C., on Nov. 27, 2013. Photographer: Andrew Harrer/Bloomberg

Just when you thought the U.S. economy was roaring back to health, Former Federal Reserve Chairman Alan Greenspan is here to tell you otherwise.

“The United States is doing better than anybody else, but we’re still not doing all that well,” Greenspan, 88, said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “We still have a very sluggish economy.”

Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back.

“Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

Greenspan, who retired from the Fed’s helm in January 2006, said he expects growth to dip below a 3 percent annual rate in the fourth quarter of this year. His forecast is in line with the estimate of 2.5 percent in a Bloomberg survey of economists.

He spoke a week after revised figures showed gross domestic product expanded at a 5 percent rate in the third quarter, the fastest pace since 2003. The data helped drive the Dow Jones Industrial Average above 18,000 for the first time.

A report today showed that consumer confidence rose in December as Americans embraced more employment opportunities and persistent declines in prices at the gas pump. The Conference Board’s index increased to 92.6 from a revised 91 in November that was stronger than initially estimated. A measure of current conditions advanced to the highest in almost seven years.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE