MercoPress. South Atlantic News Agency

Greenspan optimistic on US economy performance

Former Federal Reserve chairman Alan Greenspan said on Thursday the US economy was overcoming the housing sector downturn and described growth prospects as “reasonably good”.

"Most of the negatives in housing are probably behind us" Greenspan said at a conference sponsored by the Commercial Finance Association. "The fourth quarter should be reasonably good, certainly better than the third quarter" added the banker who underlined that "we've gone through a very weak patch in the summer".

Greenspan who is writing a book on 18 years at the Fed, has also entered the highly lucrative public speaking circuit, and is in much demand from financial market audiences around the world.

The US Department of Commerce revealed Thursday that new home sales increased last September for the second month running, following builders' price cuts, the largest in 36 years, while supply contracted.

One family home sales jumped 5.3% in September with an annual rate of 1.075 million units, compared to 1.021 million in August said the Commerce Department. Estimates were in the range of 1.040 million units.

However in spite of the upturn of the US economy, the former Fed chairman warned the US dollar was being challenged as the world's reserve currency.

"We're beginning to see some move from the dollar to the euro, both from the private sector ... also from monetary authorities and central banks" said Greenspan.

The currency remarks were in response to a query on the U.S. current account deficit during an hour-long question and answer session before a packed audience of more than 1,600.

Revisiting a theme that he spoke on during his time as Fed chairman, Greenspan said "concentration risk" meant investors would eventually grow wary of adding to already heavy dollar holdings, even though returns were good.