When the world's most celebrated economic prognosticator, bound for an honorary knighthood, says it is time for humility, then the future must be truly murky.
Not that US Federal Reserve Chairman Alan Greenspan was gloomy when he swept through London in a whirlwind speaking tour on Wednesday, but the 76-year-old central banker conceded the times were extraordinary.
"This is one of the most difficult periods of forecasting we have confronted," he told the Society of Business Economists in one of three addresses over the course of a long day.
Worry about war with Iraq, the specter of runaway oil prices, a funk in global financial markets -- all these have conspired to cast a pall across investor hopes and are adding to policymakers' difficulties in making predictions.
"Our ability to forecast is limited. We have to have some humility," Greenspan said. But he did say he did not foresee the US economy -- the world's largest -- slipping back into a renewed recession after climbing out of a slump last year.
"Our underlying forecast is for continued expansion," the Fed chief said.
The lunch session with economists was the type of forum Greenspan appears to enjoy, fielding questions from like-minded colleagues that covered the waterfront of the number-crunching set's interests.
Many of his responses seemed aimed at calming jitters about the possibility that war with Iraq could trigger spiraling oil prices that would unsettle a tenuous global expansion.
Greenspan said long-term oil prices have fallen over the last decade, so any spike this time would have to be "significantly larger" than in the 1990-1991 Gulf War to have a major impact. Prices rose after that war with Iraq, but settled back quickly.
All that said, he admitted that oil prices bore watching, and that indeed the last few recessions in the US were preceded by a sharp uptick in energy costs.
It is possible to make reasoned assumptions about the effects of war on oil. "But we cannot know for sure because we are dealing with great uncertainty," Greenspan said.
To a large degree, it is not war itself that creates economic problems, but the doubt in consumers' minds caused by uncertainty about war, he added.
Fed policymakers warned on Tuesday that "heightened geopolitical risks" were increasing uncertainty about the US economy's future. However, the US central bank voted to keep interest rates steady at four-decade lows despite rare dissent within its ranks, with two members of the rate-setting committee calling for a cut in borrowing costs.
Earlier this month, Greenspan told lawmakers on Capitol Hill that only a prolonged conflict was likely to inflict serious economic damage.
In his brief visit to London, Greenspan spoke at the opening of a new building for the British Treasury, hobnobbed with the economists and addressed a blue-ribbon crowd at Lancaster House in the evening, feted throughout the day by government and industry leaders.
He spread the gospel of US-style free enterprise, urging the lightest regulatory hand to help innovators who want to exploit ideas to create wealth in new ways that spread the benefits.
"The extent of government intervention in markets to control risk-taking is, at the end of the day, a trade-off between economic growth with its associated potential instability and a more civil but less stressful way of life with a lower standard of living," Greenspan said.
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