The US economy is in the middle of a pause in a modest recovery that feels like a "quasi-recession," Alan Greenspan, the former chairman of the Federal Reserve, said Sunday.
Speaking on NBC's "Meet the Press," Greenspan said if home prices start falling again, we could be facing a double-dip recession.
"It's touch and go," the ex-Fed chairman said.
Greenspan said that if prices stabilize, "then I think we will skirt the worst of the housing problem."
The comments followed news on Friday that US second quarter economic growth slowed to 2.4 percent.
Nomura this weekend predicted the Fed will ease its monetary stance when it meets on August the 10th given signs that the US recovery is slowing.
On Friday, Federal Reserve Bank of St. Louis President James Bullard told CNBC that allowing tax cuts enacted during the George W. Bush administration to expire would be a mistake.
Greenspan said it would be wrong for Washington to fund tax cuts with borrowed money to help the economy push on.
"I'm very much in favor of tax cuts, but not with borrowed money" he said, adding that doing so normally "proves disastrous."
Asked whether he agrees with the Republican Party that tax cuts pay for themselves Greenspan said "No, I do not."
Greenspan believes the big problem facing the US economy is that it is very distorted, with the recovery limited to "large banks, large businesses and high income individuals."
Greenspan believes the jobs market will remain weak.
"There's nothing out there that I can see which will alter the trend or the level of unemployment," he said.