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Greenspan sees possible recession

He details signs that expansion is ending

HONG KONG -- Former Federal Reserve chairman Alan Greenspan warned yesterday that the US economy might slip into recession by year's end.

The economy has been expanding since 2001, he said, and there are signs the current economic cycle is coming to an end.

"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 via satellite link to a business conference in Hong Kong. "For example in the US, profit margins . . . have begun to stabilize, which is an early sign we are in the later stages of a cycle."

"While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 . . . with some slowdown," he said.

Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out a recession late this year.

The US economy grew at a surprisingly strong 3.5 percent rate in the fourth quarter of 2006, up from a 2 percent rate in the third quarter. A survey released yesterday by the National Association for Business Economics showed that experts predict growth of 2.7 percent this year, the slowest rate since a 1.6 percent rise in 2002.

Greenspan also said the US budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years, remains a concern.

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