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In economy, what goes down can come back up

WASHINGTON-Federal Reserve Board Chairman Alan Greenspan told the House Financial Services Committee last week that between the agency's rate cuts and the administration's tax cut, the American economy should be reversing its downward course in due time. "Our accelerated action reflected the pronounced downshift in economic activity, which was accentuated...

By Sarah Snell Cooke | Updated on July 24, 2001

WASHINGTON-Federal Reserve Board Chairman Alan Greenspan told the House Financial Services Committee last week that between the agency’s rate cuts and the administration’s tax cut, the American economy should be reversing its downward course in due time. “Our accelerated action reflected the pronounced downshift in economic activity, which was accentuated by the especially prompt and synchronous adjustment of production by businesses utilizing the faster flow of information coming from the adoption of new technologies,” he said. “A rapid and sizable easing was made possible by reasonably well-anchored inflation expectations, which helped to keep underlying inflation at a modest rate, and by the prospect that inflation would remain contained as resource utilization eased and energy prices backed down.” Additionally, the effects of the tax cut, falling energy costs, a decrease in bloated inventories, and increases in capital spending should help bolster the once soaring economy. Despite the slowdown, Greenspan called the past decade “extraordinary” in economic terms. [email protected]

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