While the last three U.S. recessions were preceded by a sharp spike in energy prices, the country should be able to escape its current problems without long-term harm, Federal Reserve Chairman Alan Greenspan believes.
Greenspan said recent declines in the price of gasoline and natural gas and increased supplies of those fuels give hope that the worst may be over for the country.
"The short-term energy problems we are experiencing for gasoline, natural gas and electric power will be resolved, one hopes, without any further adverse impact on our economy," Greenspan said in a speech Thursday night to the Economic Club of Chicago.
But he warned that California, which already has experienced rolling blackouts because of insufficient electric power supplies, faced more problems until increased generating capacity is brought on line.
Because California accounts for one-eighth of the total U.S. economy, problems in that state could have spillover effects on the overall economy, Greenspan said.