Thank you, Mr. Chairman. As we all know, in November 2001, the National Bureau of Economic Research declared that the U.S. economy has been in recession since March 2001, ending the longest expansion in U.S. history and beginning the first downturn in a decade.
Chairman Greenspan and the Federal Reserve Board of Governors have been confronted with a recession very different than those in the past. Previous recessions were a result of a decline in consumer spending which led to a reduction in production and capital investment.
The current recession has resulted from a decline in production and capital investment while consumer spending has remained strong. The Federal Reserve sharply reduced the federal funds rate in 2001 to encourage economic growth.
There have been some encouraging economic indicators that show the early signs of a recovery. Examples of these include the growth of the gross domestic product in the fourth quarter by 1.4 percent and the significant increases in the consumer confidence index since November. In addition, durable goods orders rose in January by 2.6 percent.
However, not all economic data has been positive. Unemployment remains much higher than it was a year ago. Corporate profits remain weak and new home sales reached an 18-month low in January.
Chairman Greenspan, I thank you for appearing today. I look forward to hearing your thoughts on the state of the economy.