Federal Reserve Upbeat On Economy

The Arizona Republic reports that Alan Greenspan stated that the economy is on reasonably firm footing and isn't fanning worrisome inflation. Over the past year, the pace of economic activity has "alternatively paused and quickened," an uneven expansion that to a significant degree is related to the impact of gyrating energy prices, Greenspan said. Addressing the red-hot housing market, Greenspan said that while rapidly rising home prices probably won't lead to a national price bubble, there appears to be signs of "froth in some local markets where home prices seem to have risen to unsustainable levels." In addition, Greenspan said that the dramatic increase in interest-only mortgages and the introduction of relatively exotic forms of adjustable-rate mortgages are of concern, stating "the apparent froth in housing may have spilled over into mortgage markets." More...