Friday, June 10, 2005

Greenspan on the Economy; Is the Glass Half-Full or Half-Empty?

CNN gave little mention of Federal Reserve Chairman Alan Greenspan’s comments to the Congress’ Joint Economic Committee while Fox News’ article called it “his first extensive comment on the economy since February.” Fox paints a positive picture as noted with the headline of “Greenspan: US Economy 'On Reasonably Firm Ground'.” By contrast, CNN ran an article headlined “European shares fall pre-Greenspan” before Greenspan spoke and then “Greenspan lifts European stocks” later have he did speak. CNN’s only mention of what Greenspan said was the following:

Greenspan told Congress said he wasn't concerned that a serious slowdown was emerging from a recent soft patch in U.S. economic data. And he repeated language from the Federal Open Market Committee that the Fed can continue to raise interest rates at a "measured pace."

Is CNN downplaying generally positive news about the U.S. economy? Is the glass half empty? As quoted above, CNN mentions that Greenspan was not concerned about a “serious slowdown” so that seems to leave it open for a slowdown, even if not a serious one, and mention is made of raising interest rates.

Is the glass half full for Fox? Look at these positive comments in Fox’s article:

… the U.S. economy was on a "reasonably firm footing" while inflation was under control, a situation that will allow policymakers to raise interest rates at a measured pace. [Note: While interest rates are mentioned here it provides more background than CNN’s brief statement and puts the probable increases in as much of a positive light as possible.]

Greenspan warned the congressional Joint Economic Committee about a possible housing bubble in some local markets but said the overall economy appeared healthy and would likely remain so.

Greenspan's generally upbeat assessment of the economy provided support for the view that the Fed, which has raised interest rates eight times over the past year, planned to continue nudging rates higher at a gradual pace.

"Despite some of the risks that I have highlighted, the U.S. economy seems to be on a reasonably firm footing, and underlying inflation remains contained," Greenspan said in prepared testimony.

Links to the articles:
http://www.cnn.com/2005/BUSINESS/06/09/europe.stocks.ap/index.html

http://www.foxnews.com/story/0,2933,159025,00.html

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