Weekly Reader October 29, 1999

Happy Days Update

On October 22, Federal Reserve Chairman Alan Greenspan once again praised
technological improvements for the recent growth in the U.S. economy, but
also warned that such an expansion cannot continue indefinitely. Greenspan
spoke to the Business Council, a group of business executives, just hours
after the stock market surged on what traders deemed was very positive
government reports, including the Gross Domestic Product and the Employment
Cost Index.

Greenspan warned that the U.S. economy might be growing too fast, which
would lead to higher prices and inflation—an economic condition that
could lead to a recession unless corrected early on. The solution to rising
inflation, said Greenspan, would be for the Federal Reserve to raise
interest rates, making money harder to borrow and slowing down economic
growth. But even Greenspan was forced to admit that the Federal Reserve is
no longer able to comfortably forecast how long the U.S. economy can
continue strong with the current low-unemployment rate and recent
standard-of-living improvements.