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Federal reserve chairman says slowdown not over yet

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March 1, 2001 

WASHINGTON-(AP) - Federal Reserve Chairman Alan Greenspan, delivering a sober assessment of the U.S. economy, told Congress Wednesday that the sharp slowdown that began in the second half of last year "has yet to run its full course."

Greenspan's comments sent a clear signal that the Fed, which already reduced interest rates by a full percentage point in January, is ready to do more to prevent the faltering economy from skidding into a recession.

Greenspan, testifying before the House Financial Services Committee, blamed much of the economy's weakness on an effort by businesses to cut back quickly on production in the face of falling sales.

Although companies are working hard to bring their excess inventories of unsold goods into better alignment with demand, he said, the process may take more time.

Excess inventories "built up in 1999 and 2000 have engendered a retrenchment that has yet to run its full course," Greenspan said, in a departure from testimony he delivered to the Senate Banking Committee on Feb. 13.