WASHINGTON-- Federal Reserve Chairman Alan Greenspan said Thursday he wasn't concerned that a serious slowdown was emerging from a recent soft patch in U.S. economic data.
He repeated language from the Federal Open Market Committee that the Fed can continue to raise interest rates at a "measured pace."
"The most recent data support the view that the soft readings on the economy observed in the early spring were not presaging a more-serious slowdown in the pace of activity," he said in prepared testimony to the Joint Economic Committee.
"The U.S. economy seems to be on a reasonably firm footing and underlying inflation remains contained," he said. Consumer spending had rebounded and business investment was more upbeat.
While acknowledging "froth" in some housing markets, Greenspan dismissed concerns about major impact on the economy.
"Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels," he said.
"Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications," he said.
He said volatile energy prices have had an impact on growth.
"Over the past year the pace of economic activity in the United States has alternately paused and quickened," he said. "Despite the uneven character of the expansion over the past year, the economy has done well, on net, by most measures."
Greenspan said inflationary pressures remain subdued. Profits are robust despite higher unit labor costs. "Whether that rise in unit costs will feed into the core price level or will be absorbed by a fall in profit margins remains an open question," he said.
"Evidence of increased pricing power can be gleaned from the profit margins of nonfinancial businesses, which have continued to press higher even outside the energy sector," Greenspan said.