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To: j g cordes who wrote (35982)	1/24/2002 12:18:59 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69299

Thursday January 24, 10:56 am Eastern Time Greenspan: Economy May Be Breaking Free By Joanne Morrison WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan on Thursday cautiously embraced the idea that a recovery was emerging in the recession-hit U.S. economy, a message taken by financial markets to mean the spree of interest rate cuts was at an end. I'm a Woman Man seeking a Man Woman Enter City, State or Zip: In testimony noticeably more upbeat than a much-debated address delivered Jan. 11, Greenspan said the economy underwent a ``significant cyclical adjustment'' last year, worsened by the Sept. 11 attacks. ``But there have been signs recently that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm,'' he said. Most economists said the tone of the latest comments suggested that Fed policymakers would leave interest rates unchanged when they meet next week. His Jan. 11 speech had initially led markets to expect a quarter-point interest rate reduction. Fed officials in recent days have tried to steer investors toward the view that the U.S. central bank might instead stand pat after 11 reductions last year. ``Greenspan was more upbeat this time than he was last time. Obviously he can't say that everything is wonderful, but his view is evolving based on the flow of data since he spoke last,'' said Harvey Katz, chief economist with Value Line Inc in New York. Economic data from retail sales to jobless claims to manufacturing activity released in the past couple of weeks have been better than analyst expectations. The powerful central banker's words helped drive up the Dow Jones Industrial average more than 100 points initially, and the tech-laden Nasdaq composite index more than 30 points. Greenspan offered few specifics on the hot topic of fiscal stimulus except to say that the budget picture now was not dire, despite a massive reduction in the 10-year surplus forecast. But at the same time, he urged lawmakers who are considering a number of fiscal measures to stimulate the economy to be mindful of pressures that will face the budget in the future, when the huge Baby Boom generation enters its retirement years around 2010. His comments come as the Senate prepares to begin debating a $69 billion stimulus package, an effort that had stalled amid partisan bickering. The package includes tax cuts for new business investment, rebates for low income workers, extended unemployment benefits and more federal aid to cash-strapped states. That Democrat-backed plan is considerably less substantial than the $200 billion multiyear plan backed by President Bush and congressional Republicans.