WASHINGTON : The US economy is still reeling from housing and credit woes but faces a "less than 50-50" chance of slipping into recession, former US Federal Reserve chairman Alan Greenspan said on Monday. Greenspan, in an interview with CNBC television, said the world's biggest economy is slowing as a result of of tighter credit, the outcome of the crisis in sub-prime housing loans.
"It's fairly apparent that even though the credit crunch is easing, its residual ... is going to slow this economy down to a certain extent, and indeed, you can see it, not in the third quarter data, but almost certainly going to see it in the coming quarter," Greenspan said.
"But as yet, the odds of a recession are still less than 50-50."
The former Fed chief, who has been giving a flurry of speeches and interviews following the release of his book last month, said the housing woes affecting the US economy will take more time to work through.
"We certainly haven't seen the worst of housing," he said.
"In fact, the major constraint on the United States at this moment is a very large overhang of newly built, but vacant homes which home builders find very expensive to maintain and are gradually beginning to throw them on the market."
Greenspan said the phenomenon is "pressing prices down which obviously is affecting home construction, but far more importantly, it's lowering the equity buffer in homes, which means that the very large holdings of asset-backed securities, specifically sub-prime asset backed, are potentially threatened." - AFP/de
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