Greenspan Says US Growth is at Zero

U.S. economic growth has stalled and recovery may take longer than usual, former U.S. Federal Reserve chairman Alan Greenspan said on Monday.

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J. Scott Applewhite / AP

As of right now, U.S. economic growth is at zero," Greenspan said at an investment conference in Jeddah, Saudi Arabia's second-largest city. "We are at stall speed."

"Recovery might take longer to emerge than it usually does," he added.

The longer growth stays at zero, the more likely the world's largest economy would start to contract, he said, adding that globalization of trade could ease some shocks.

"Growing globalization of trade and the economy would facilitate the absorption of shocks in the U.S.," he said.

In updated economic forecasts released last week, the U.S. central bank lowered its outlook for 2008 growth by a half percentage point to between 1.3 percent and 2 percent, citing the prolonged housing slump and bottlenecks in credit markets.

The Federal Reserve said at the time it was worried the economy could face further setbacks, even after a series of interest rate cuts.

Greenspan also said a boom in oil prices, which hit a record of $101.32 on Wednesday, will "go on forever". 

Soaring crude prices have kept U.S. inflation high, even as growth slows.