Saturday, May 12, 2007

Greenspan warns of gloom for US economy

According to the former Federal Reserve chairman Alan Greenspan, the world's largest economy, the United States could be heading for recession.

New figures released showed retail sales in the U.S. unexpectedly tumbled last month, hit by a double whammy of higher petrol prices and a slowing housing market.

American consumers spent $372bn last month, a figure that is less than had been expected, giving rise to speculation that the Fed, under new chairman Ben Bernanke, may start cutting interest rates later this year.

The higher gasoline prices, combined with a weakening housing market and a softer job market, are weighing on consumers.

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