MercoPress. South Atlantic News Agency

Slower growth for US economy.

Prospects for the United States economy remain uncertain even after the end of the Iraq war, and the recovery momentum is still in doubt, indicated the US Federal Reserve president Alan Greenspan addressing a Congressional committee this week.

"We still don't have sufficient data regarding economic activity following the end of hostilities as to make a sound judgment regarding the underlying strength of the real economy", said Mr. Greenspan.

Reports from the labor market and production have been disappointing but productivity improved and financial markets are growing, added Mr. Greenspan.

"Looking ahead, consensus expectations about a recovery of economic activity are not unreasonable, however the moment and extent of that improvement remains uncertain".

Mr. Greenspan remarks follow the release of poll done by the Federal Reserve of Philadelphia among leading analysts, most of whom downgraded the US economy growth expectations for 2003.

A total of 35 economists forecast that GDP will expand 2,2% this year, a drop from the 2,5% of just three months ago. Most economists believe the US economy will grow 1,8% during the second quarter, considerably less that the estimated 2,7%, but "they all coincide in a strong recovery beginning in the second half of the year, with a healthy 3,4% expansion in both third and fourth quarter".

Unemployment will remain unchanged at 5,9% during the rest of 2003 according to the Philadelphia Fed poll.

The poll release coincides with mounting problems with the US budget that is heading for a huge annual deficit of 300 billion US dollars, according to the latest revenue figures. Surplus in April that is considered a particularly positive month since it's the deadline for filing taxes, was only 51 billion down from 67 billion a year ago. To stimulate the economy the Bush administration is pushing hard for a massive controversial tax cut that has had different reactions in Congress, Representatives approved a 550 billion cut in ten years, but Senate lowered the cut to 350 billion.

Besides two influential billionaires Warren Buffet and George Soros attacked the proposal, particularly the elimination of tax on dividends.

Mr. Buffet considered the second richest man in the US, remarked that the tax cut proposal "promotes class welfare, for my class".

Mr. Soros a renowned Hungarian-British currency speculator said that the proposed tax cut "is basically using the recession to redistribute income to the wealthy; it's not a very effective way of using a deficit".