By Evelina M. Tainer, Chief Economist, Econoday
1/25/02

Fed chairman Alan Greenspan testified before the Senate Budget Committee this week and reaffirmed many of the remarks he made a couple of weeks ago, but he felt that many market participants had misinterpreted his views on the economic recovery. Greenspan did affirm signs of an economic bottoming but emphasized that the approaching recovery will be modest. He warned that market players have been a bit overly optimistic about the prospects of recovery this year. Committee members questioned Greenspan on his views regarding fiscal stimulus. He said he had some inkling three months ago that it would be useful but no longer, given now evident signs of recovery and odds against a deepening recession.