Greenspan: Recovery Has Turned |Sluggish'

PROVIDENCE -- Federal Reserve Chairman Alan Greenspan said the economy has lost steam and the recovery has slowed down after a spark of growth earlier this spring and summer.

He told those at a University of Rhode Island business conference that in recent weeks the economy "turned demonstrably sluggish." It is growing, "but at a pace a good deal slower than one typically sees during the recovery out of a recession."

He called the slowdown in business lending "unprecedented" and blamed the 1981 tax changes for excessively shortening depreciation schedules on real estate, touching off over-building.

"The economy is moving forward, but in the face of a 50 mile-an-hour headwind," he added.

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