Greenspan and the Housing Market

Posted at 7:07 PM, Nov. 8, 2006

"It looks as though the worst is behind us" in terms of the effect of the housing slump on economic growth, he told financial advisers at a conference in Washington organized by Schwab Institutional, a division of Charles Schwab & Co.

"We're obviously going through a significant slowing period, which as best as I can judge is quite likely to be temporary," said Greenspan, 80, who retired in January after more than 18 years leading the world's most influential central bank and whose words are still closely monitored in financial markets.

U.S. economic growth slowed sharply, to a sluggish 1.6 percent annual rate, in the July through September period, largely because of a steep drop in home construction. Home sales and prices have also fallen recently in many markets.

Greenspan, a private consultant, said the housing downturn has "a way to go" before it hits bottom, but its effect on the rest of the economy should abate in the months ahead.

Other U.S. industries are enjoying healthy profits, consumer spending has remained solid and "the global economy is in extraordinarily good shape," he said. "Things don't look bad."