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COPYRIGHT 2005 Voxant Inc.
Original Source: NIGHTLY BUSINESS REPORT
PAUL KANGAS, ANCHOR: The Fed chairman cautions investors that what goes up inevitably will come down, especially when it comes to asset prices. Alan Greenspan also tells a group of business economists, the economy has weathered the rise in energy prices pretty well.
SUSIE GHARIB, ANCHOR: It`s the rise in natural gas prices that has millions of Americans worried, because it could mean huge heating bills this winter. We get an update from one of the largest players in the energy industry, the head of Sempra Energy, Stephen Baum.
KANGAS: U.S. Airways trades again on the New York Stock Exchange, in its first day as a bigger, and it hopes, better airline. But it`s not such a stellar debut. We`ll have the story.
GHARIB: The artist as authority: How technology is changing the music business, giving control to the people who write and perform their own works.
KANGAS: I`m Paul Kangas.
GHARIB: And I`m Susie Gharib. This is "Nightly Business Report" for Tuesday, September 27th.
(COMMERCIAL BREAK)
GHARIB: Good evening, everyone. A strong warning today from Alan Greenspan, not about skyrocketing energy prices but rather interest rates. The chairman of the Federal Reserve said investors shouldn`t count on low interest rates lasting indefinitely. Speaking to a group of business economists, Greenspan repeated his concern that many Americans could be financially vulnerable as interest rates rise. Darren Gersh has more.
DARREN GERSH, CORRESPONDENT: Addressing business economists by satellite, the Fed chairman warned investors not to bet on interest rates staying low forever.
ALAN GREENSPAN, FED CHAIRMAN: History cautions that extended periods of low concerns about credit risk have invariably been followed by reversal, with an attendant fall in the prices of risky assets.
GERSH: Greenspan seemed less concerned about rising energy prices, saying the economy appeared to be weathering the shock at the pump reasonably well. Observers found a consistent theme in Greenspan`s remarks, and those by other members of the Fed`s interest rate setting committee.
LAURENCE MEYER, VICE CHAIRMAN, MICROECONOMIC ADVISERS: The economy is very resilient. It was very strong before Katrina and Rita. These hurricanes will slow the economy in the second half, but boost growth next year, and don`t fundamentally change the task of monetary policy, which continues to be to remove accommodation that`s no longer appropriate.
GERSH: Consumers, however, are telling forecasters they`re worried. With the hurricanes, rising energy bills, and a less optimistic view of the employment outlook, it`s probably no surprise that consumer confidence plunged 20 points in September to its lowest level in two years.
LYNN FRANCO, DIRECTOR, CONFERENCE BOARD CONSUMER RESEARCH CENTER: We really don`t see consumer confidence coming back until job growth comes back, which will probably be late 2005, early 2006. Until then, we are going to kind of stay at these post-Katrina levels.
GERSH: Housing is also giving off mixed signals. The Commerce Department reports new home sales in August dropped almost 10 percent, to an annual rate of 1.23 million, but the decline comes off after a record- setting pace in July. Economist David Seiders says if you average the two months together and take into account recent surveys of builder sentiment, housing activity is holding up well.
DAVID SEIDERS, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS: The market looks like it`s fundamentally kind of plateauing right around record levels, and maybe even a little bit of a cooling starting to develop, although the evidence is still kind of out on that one.
GERSH: In his speech, Greenspan again defended the Fed`s handling of the stock market bubble. The great irony of monetary policy, Greenspan said, is the more...
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