The American economy has just begun to feel the impact of the financial storms swirling through Asia and will slow noticeably "before spring is over," Federal Reserve Chairman Alan Greenspan said Thursday.
"We have as yet experienced only the peripheral winds of the Asian crisis," Greenspan told the Senate Budget Committee in his first congressional appearance in three months.But, he said, before spring ends sharp currency devaluations in Asia will show up in this country through "reductions in demand for our exports and intensified competition from imports."
"All of this suggests that the growth of economic activity in this country will moderate from the recent brisk pace," he said.
Greenspan's last congressional appearance came in late October just days after the Asian crisis provoked a record 554-point drop in the Dow Jones average of industrial stocks.
At that time, he said it was conceivable the crisis could prove a "salutary event" for the American economy, slowing growth enough to keep inflation in check but not so much as to threaten the nearly 7-year-old expansion. He stuck with that view Thursday.
"A moderation (in economic growth) would appear helpful at this juncture," he said. "The likelihood that we shall be seeing some lower prices on imported goods as a result of the difficulties in Asia may afford some breathing room from inflation pressures."
As recently as early October, Greenspan was warning that labor shortages created by last year's robust economic growth threatened to put the economy on "an unsustainable track."
However, Thursday, he cited risks to the economy from both inflation and from too-rapid disinflation.