WASHINGTON -- The U.S. recession looks more like a thing of the past, but it is too early to conclude that an economic rebound is in the works, Federal Reserve Board Chairman Alan Greesnpan said yesterday.
Economic reports of the last several weeks are "strongly suggestive of a bottoming some time in the second quarter," Mr. Greenspan told the House Ways and Means Committee, but he added that he did not see "any measurable upward thrust" in the economy either.
More optimistic comments were offered by Federal Reserve Board Governor David Mullins, who appeared before the Senate Banking Committee at a confirmation hearing for his nomination to be Fed vice chairman. Mr. Mullins said there is an increasing likelihood that U.S. output of goods and services will rise in the third quarter.
Mr. Mullins also seemed to rule out any further easing of interest rates by Fed officials, saying long-term rates would have been driven higher if the Fed had acted more aggressively to lower rates. There is already "a fair amount of stimulus in the pipeline," he said.
Mr. Greenspan said inflationary pressures "are well in hand at this stage," and expressed optimism that the United States will move out of recession without having the broad-based resurgence in prices typical of past recoveries.
Similar comments were made last week by other Fed officials, and Mr. Mullins said at his hearing that he believes price pressures are diminishing.
Many analysts believe that chances of a recovery have improved greatly with some of the latest economic reports from the government. Last week, the Commerce Department reported retail sales jumped 1.0% in May, the second monthly consecutive increase. The Federal Reserve Board reported that industrial production also rose last month for the second time in a row.
The Commerce Department said yesterday that housing starts were essentially unchanged in May, but revised figures for April showed starts soared 8.2%. Building permits, a measure of future construction activity, shot up 7.2% in May to a seasonally adjusted annual rate of 979,000 units, the highest rate since last September.
Still, Mr. Greenspan adhered to his usual cautions stance. He remained particularly gloomy about the credit crunch, saying it has contributed to the reluctance of banks to pass on the lower cost of funds they have been enjoying to their customers.
"We do not yet see any turn or marked easing in the credit crunch, although the evidence we have suggests it is not getting worse," said Mr. Greenspan. "We are still in the grips of the credit crunch."
Mr. Greenspan also said it is impossible to predict the length and breadth of any economic recovery, or to know if a short rebound will be followed by another downturn.
"I just don't think we have the capability . . . to make realistic projections that far in the future," he said in response to a question from Rep. Jim Bunning, R-Ky.