In his testimony two week ago, Greenspan, while noting concerns about slumping confidence, appeared to strike a big more upbeat note. Even with the declines, he said at that time, confidence remained at a level consistent with economic growth. Greenspan omitted that line from Wednesday's remarks. He also said the exceptional degree of economic slowing so evident toward the end of 2000 seemed less evident in January and February. Gains or losses from such investments tend to affect how wealthy people feel and their willingness to spend.
Consumer spending accounts for two-thirds of all economic activity.
He also defended the Fed's decisions to boost interest rates six times between June 1999 and May of 2000 as needed action to keep the economy from overheating at that time, something some Democrats on the committee thought contributed to the current economic slowdown. Greenspan's assessment of the economy comes as Bush tries to rally the nation behind his plan for a major tax cut and a budget blueprint that he says will shrink government debt while protecting education, Social Security and other popular programs. The Fed slashed interest rates twice in January, totaling a full percentage point, the first time the central bank has moved so quickly during Greenspan's 14-year tenure. The first rate cut was on Jan. 3, in a rare move between meetings of the Fed's chief policymaking group, the Federal Open Market Committee. The second cut came at a scheduled Jan. 31 meeting.