Greenspan Says Economy Will Emerge From Scandals

By Agence France-Presse Federal Reserve Chairman Alan Greenspan said July 16 the U.S. economy was set for better-than-anticipated growth as it slipped out of the grip of a corporate crime wave. "The effects of the recent difficulties will linger for a bit longer but, as they wear off and absent significant further shocks, the U.S. economy is poised to resume a pattern of sustainable growth," he said. As the business world emerged from an "infectious greed" fed by the speculative markets of the late 1990s, new misdeeds were likely to taper off, the powerful Federal Reserve boss said. "Corporate governance will be just fine for the next two years because everyone has been chastened," he told senators after presenting a semiannual monetary policy report. "The system is frayed but it is not broken," Greenspan said. "If we endeavor to try to change the system in a fundamental way, we may end up doing more damage than help." The Federal Reserve's monetary policy report forecast economic growth of 3.5% to 3.75% this year from the fourth quarter of 2001, up from an earlier expectation of 2.5% to 3% growth. But final demand -- consumer spending, business investment and exports -- would be critical, Greenspan said. "While final demand has been increasing, the pace of forward momentum remains uncertain," bolstering the expectation that interest rates are unlikely to rise for some time. Copyright Agence France-Presse, 2002