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Economy

July 16, 1994|From Times Staff and Wire Reports

Fed Chief Warns About U.S. Deficit: Federal Reserve Board Chairman Alan Greenspan said the United States is having "ideal" economic times, but he warned that future prosperity is jeopardized by the nation's deep budget deficit. "The U.S. economy has recently been experiencing the ideal combination of rising activity, falling unemployment and slowing inflation," Greenspan told a bipartisan commission on government spending and tax reform. But he made it clear the nation must not let good economic times create an atmosphere in which policy-makers take the view that the deficit, despite some recent improvement, is no longer a critical problem. He said the deficit is pervasive and continues to keep long-term interest rates high, making it more expensive to finance the red ink. He also said the deficit looming in the years ahead is mostly a creature of medical costs, which are expected to balloon.

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