Greenspan - Employment upturn another reason for optimism

AP Economics WriterWASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan, who last week said the recession has apparently ended, voiced further optimism about the economy Wednesday, noting that employment had increased in February.

Speaking to a bankers meeting, Greenspan said that job layoffs diminished "noticeably in January and employment turned up last month."

That reference was to Friday's report that in February businesses added to their payrolls for the first time in seven months, gains that helped to push the jobless rate down to 5.5 percent last month.

Testifying to the Senate Banking Committee last week before the unemployment report was released, Greenspan had offered his most optimistic assessment of the economy to date, saying that "the recent evidence increasingly suggests that an economic expansion is already under way."

Greenspan on Wednesday did not repeat that exact phrase but his overall comments, including reference to the unemployment data, suggested he was not backing away from his optimism that the recession has ended.

But Greenspan also stuck to his view that the current recovery is likely to be slower than previous economic rebounds, given that consumers continued spending with abandon last year on such big-ticket items as new cars and homes, even in the midst of the slowdown.

"In recent days, encouraging signs of strengthening underlying trends in final demand have emerged, although the dimensions of the pickup remain uncertain," Greenspan said in remarks transmitted by satellite to the Independent Community Bankers of America, meeting in Honolulu.

"If the recent more favorable economic developments gather momentum, uncertainties will diminish, risk premiums will fall and the pace of capital investment ... will increase," Greenspan said.

Adding to the optimism about the economy, the National Bureau of Economic Research, which has the job of officially declaring the beginning and end of recessions, posted a new memo on its Web site noting the favorable increase in employment in February.

"Payroll employment increased slightly in February, the first increase in seven months," the NBER said. "Other signs indicate that the decline in activity that began last year may be coming to an end."

The NBER, composed of academic economists, said "at some future date" it would announce its determination of when the recession had ended. It noted that it did not declare the 1990-91 recession over until December 1992, even though it determined that the slump had actually ended in March 1991.

------On the Net:

Federal Reserve: http://www.federalreserve.gov

NBER: http://www.nber.org