Alan Greenspan, chairman of the Federal Reserve Board, said on Wednesday that the economic expansion has "regained some traction" after the slowdown this summer and suggested that the central bank can be expected to keep raising interest rates, including at its next meeting later this month.
"The most recent data suggest that, on the whole, the expansion has regained some traction," Greenspan told the House Budget Committee. "Consumer spending and housing starts bounced back in July after weak performances in June," he said, while consumer prices are climbing more slowly than they did last spring.
The Fed chairman again described the recent slowdown as a "soft patch" that stemmed largely from a surge in oil prices. Though he expressed concern that oil prices could remain high for some time, he was cautiously optimistic that higher prices would drive down demand and encourage oil producers to expand capacity.
Taken together, Greenspan's remarks did nothing to dissuade investors from their widespread expectation that the central bank will raise short-term interest rates by another quarter point, to 1.75 percent, at the next policy meeting on Sept. 21.
But his comments also helped assuage fears that the Fed might be inclined toward a more aggressive policy of raising interest rates. In response, the bond market rose as the yield on 10-year Treasury notes fell to 4.16 percent from 4.24 percent on Tuesday.
The Federal Reserve's beige book, which compiles reports of business conditions and was released on Wednesday, reported that consumer spending softened in July and August but noted that overall economic activity remained healthy.
Meanwhile, Greenspan dis-tanced himself a bit more from the Bush administration and congressional Republicans on the issue of reducing the federal deficit. As he has before, the Fed chairman urged lawmakers to reinstate rules that expired in 2002 that required Congress to pay for both tax cuts and new spending programs by either spending cuts or tax increases in other areas.
US President George W. Bush and Republican leaders in Congress have opposed applying any such "pay-as-you-go" restrictions on tax cuts, insisting that restrictions should apply only to new spending programs.
Greenspan said the federal government needed to act quickly, because it would begin to face much bigger fiscal problems in the next few years as the nation's baby boomers begin to reach retirement age and start demanding Social Security and Medicare benefits.
"I would prefer to have lower taxes and lower spending," Greenspan told lawmakers.
In contrast to previous testimony, when Greenspan strongly urged Congress to resort to tax increases only as a last resort to reduce the deficit, he placed more emphasis on Wednesday on the need to address the long-term fiscal imbalances. "You should not be borrowing for your tax cuts," he said.
Economists and investors had been anxiously awaiting Greenspan's testimony about the economy, because data has shown that the rapid growth from last fall and early this year abated in June.
That left the Federal Reserve, which began in June to systematically raise rates in a series of small moves, in the uncomfortable position of raising borrowing costs even as the economy was slowing.
Greenspan admitted that job creation and consumer spending slowed sharply in June, but he said more recent signs pointed to a rebound in growth. Business investment is on "a solid upward trend," he told lawmakers.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique