By Evelina M. Tainer, Chief Economist, Econoday
July 19, 2002

The disconnect between the stock market and the economy widened further this past week. Although some economic indicators showed a slowdown in activity, in total they are still pointing to growth in the second quarter. Federal Reserve Chairman Alan Greenspan offered friendly economic comments this week to separate congressional committees. He indicated the Fed's belief that consumer spending was healthy (despite a slight dip in confidence surveys), though he cautioned that capital spending would continue to remain soft until later this year. Nevertheless, he was positive on productivity growth in this recovery. In contrast to previous appearances before Congress, Greenspan spent a lot of time discussing issues that had little to do with the economic outlook. Certainly, Greenspan is no stranger to the political maneuvering of Congressional leaders - they often ask his views on political issues. This week, Greenspan commented on the greed of corporate leaders that has led to the accounting scandals at several corporations. He was asked many questions on accounting issues and while he answered several, most were not in his purview.