Back when bankers and investors hung on his every word, Alan Greenspan was caution itself in public pronouncements . But yesterday the former chairman took the rare step of predicting the onset of an out-and-out recession. Speaking via satellite to a business conference in Hong Kong, Greenspan said the US. economy has been expanding since 2001, and that the current slow down is probably not a temporary lag but the end of a cycle.
"When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said. He singled out the stabilization of U.S. profit margins and the budget deficit, which actually shrunk last year to $248 billion, as signs of an impending reversal. While most forecasters aren't predicting a downturn until 2008, Greenspan said the economy may begin to shrink by the end of the year.