- CNTV English - CCTV News

Homepage > News > Biz >

Greenspan says "double dip" possible if home prices go down

08-02-2010 08:44 BJT

WASHINGTON, Aug. 1 (Xinhua) -- Former U.S. Federal Reserve Chairman Alan Greenspan said on Sunday that economic recession might come back if the housing market deteriorates.

U.S. economic recovery has lost momentum as indicated by a host of key economic indicators, including the worse-than-expected GDP figure released Friday. This upgraded the already-heated debate on whether the U.S. economy will slip to another downturn, or the so- called "double-dip" recession.

"It is possible if home prices go down. Home prices, as best we can judge, have really flattened out in the last year," Greenspan said in an interview on NBC's "Meet the Press."

"We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," he added.

U.S. economy grew at a 2.4 percent annual rate in the second quarter of this year, a deceleration from an increase of 3.7 percent in the first quarter of 2010 and 5.0 percent in the last three months of 2009, according to the preliminary estimate by the Commerce Department.

Greenspan says "double dip" possible if home prices go down 2010-08-02 04:08:09 FeedbackPrintRSS

"If home prices stay stable, then I think we will skirt the worst of the housing problem,"he said."But right under this current price level, mainly 5, 7 or 8 percent below, is a very large block of mortgages, which are under water, so to speak, or could be under water. And that would induce a major increase in foreclosures, foreclosures would feed on the weakness in prices, and it would create a problem."

Home prices in the 20 biggest U.S. cities rose 1.3 percent in May from a month earlier, as showed by the Standard & Poor's/Case- Shiller home price index. But this increase was mainly fueled by the residual impact from the homebuyers' tax credit, which affects purchases that close through the end of June.

The collapse of the U.S. housing market triggered the worst financial crisis since the 1930s. While other sectors, including manufacture, service and financial industry, have shown gradual improvements since recovery began in the second half of last year, housing market seems to be stubbornly sluggish and continues to drag down the fragile economic recovery.

The International Monetary Fund recently warned that even though the agency does not see the possibility of a return of economic recession, there is the real risk of a "double dip" in the housing market.

Editor:Xiong Qu |Source: Xinhua

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program