Greenspan says US economy is recovering

Federal Reserve chairman Alan Greenspan has offered his most optimistic assessment of the US economy in more than a year.

He says the country is now recovering from its first recession in a decade.

Mr Greenspan's testimony to the Senate Banking Committee was more upbeat than his outlook just a week ago.

Mr Greenspan says: "The recent evidence increasingly suggests that an economic expansion is already under way."

Since Mr Greenspan's last appearance on Capitol Hill, a batch of encouraging economic news has been released providing strong evidence that the country is on the mend from the recession, which began in March 2001.

Mr Greenspan cautioned Americans not to expect a sudden rebound.

He says: "An array of influences unique to this business cycle seems likely to moderate its speed."

He says consumers kept buying throughout the slump, which means they will have less pent-up demand.

That means spending probably won't rise as quickly as in past rebounds, making the recovery less robust than usual, Mr Greenspan says.

The strength in consumer spending, which accounts for two-thirds of all economic activity, is a key reason why the economy didn't sink deeper into a recession.