THE former Federal Reserve chairman Alan Greenspan believes there is little “hard evidence” of an American recession, but a better than even chance of a severe downturn.

In an exclusive interview with The Sunday Times, Greenspan rejects suggestions that his 18-year reign as Fed chief caused the current markets chaos, and argues central bankers now have little power to influence long-term economic trends.

Greenspan said there had not been the sudden sharp dip in economic indicators normally associated with recession. He highlighted an unexpected drop in initial claims for unemployment benefit in the US last week.

“The actual hard evidence [for a recession] at this stage is still not there . . . I don’t recall an instance when a recession has not carried with it a significant rise in unemployment,” he said.

But he believes there is a “50% or even better” chance of recession, saying US house prices still have some way to fall. “Growth in the United States at the moment is probably zero. We are at stall speed, and we are vulnerable.”

Greenspan’s comments come just days after his successor at the Federal Reserve, Ben Bernanke, engineered a 0.75 percentage point cut in US interest rates following an emergency meeting last Monday.

The Fed’s rate-setting committee is due to hold one of its regular meetings this Tuesday. Economists are certain that interest rates will be cut further – probably by half a percentage point.

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