Greenspan Cautions On Quarter 4 Sharp Drop in U.S. GDP

The United States GDP or gross domestic product should be expected to undergo a sharp drop sometime in the fourth quarter of this year. However, some stabilization may be seen in the hard-hit housing's prices sometime in the first half of the year 2009, This was the news that was reported by Alan Greenspan of th U.S. Federal reserve Chairman last Friday. While the country is not really experiencing a free fall as most people would assume, the situation is almost as close to that. This is what Alan Greenspan mentioned to his Toronto business audience the other week. Moreover, he noted that there is indeed no question that the US is experiencing sever recession as well as some significant gross domestic product drops during the fourth quarter.

Clear Forecast as Seen in Annual Trends

“It is quite clear that according to the trends we have experienced in the gross domestic product monthly figures, everything is just slipping back at a three percent annual rate,” says Alan Greenspan, “this clearly indicates that the data that was entered last October shows that it is actually a lot more worse than that. In sum, Greenspan is bluntly saying that the economy is going down with little help for control here and there. The three percent decrease in the United States economy last third quarter showed the sharpest contraction ever in the last seven years. Additionally, the payrolls had data which indicates the six point five percent jump of the United States jobless rate since October – interestingly, the highest level it has ever been since March in the year 1994. The former chief said that the United States housing prices could end up falling for another five to ten percent points right before it gets to stabilize sometime in the middle of 2009. This was his major speculation revealed during one question and answer session.

Unable to Resist Some Oversights

Alan Greenspan also told the United States Congress sometime during late October that he admitted to being wrong regarding the resistance to oversight. This was particularly about the derivative instruments such as the credit default swaps – instruments that were actually meant to be insurance items poised against bond defaults.