The country is emerging from what may be the mildest recession on record, and Federal Reserve Chairman Alan Greenspan said Monday that a lot of the credit goes to technology that allows businesses to adjust quickly to changing economic conditions.
Greenspan said the American economy, jolted by the Sept. 11 terror attacks, has shown an "impressive ability" to withstand some hard knocks, including a drop in the stock market and a sharp cutback in capital spending by businesses, a key reason the economy fell into a slump.
Such resilience likely reflected US companies' use of computer and other technology providing them with real-time information, Greenspan said.
That information was used to help companies better respond to a changing business climate, he said. For instance, moving to whittle stockpiles of unsold goods at early signs of a slowdown, rather than adding to them.
"Doubtless, the substantial improvement in the access of business decision-makers to real-time information has played a key role," Greenspan said in a speech delivered via satellite to the Institute of International Finance in New York.
"Thirty years ago, the timeliness of available information varied across companies and industries, often resulting in differences in the speed and magnitude of their responses to changing business conditions," the Fed chief said.
Against such a backdrop, the process of fixing business problems -- namely getting inventories back in line with sales -- was more drawn out and pronounced, often leading to deep and prolonged recessions, Greenspan said.
He made no mention in his speech about the future course of interest rate policy.
To rescue the economy from a recession, the Fed slashed interest rates 11 times last year. Fed policy-makers held short-term rates -- now at 40-year lows -- steady in January and March. Given the fledging economic recovery, most economists believe the Fed will continue to leave rates unchanged when its meets next on May 7.
After shrinking in the third quarter of 2001, the economy bounced back in the following quarter, growing at a rate of 1.7 percent, a stronger but still below-par performance.
Many economists believe the economy grew at a sizzling 5 percent rate in the first quarter of this year, boosted in large part by a slowdown in inventory liquidation by businesses. The government releases the GDP report Friday.
RSS