US GDP to decline significantly in Q4: Greenspan

TORONTO: Former Federal Reserve Chairman Alan Greenspan said Friday there is no doubt the world economy is in a very severe recession and that US gross domestic product will decline significantly in the last three months of the year.

Speaking at a business lunch in Toronto, Greenspan said the economy is not quite in a free fall but something close to it. "That we are in a recession, very severe, there's no question," Greenspan said. "Gross domestic product in the United States in the fourth quarter is going to be down significantly."

The former Fed chairman said early data for October show the GDP in a severe contraction that could top a 3 percent annual rate of decline. "We know we are going down and there's very little we can do about that", Greenspan said.

US home prices and stock prices are critical, he noted. Housing values might have another 5 to 10 percent to decline before they bottom out, which could come sometime in the first half of next year, he said.

"It's important to recognize we are not in quite a free fall but something close to it,'' Greenspan said. ``This economy, and indeed the world economy, has tilted over and is moving down fairly aggressively, pretty much across the board.