Former Federal Reserve chairman Alan Greenspan says the probability of a US recession was now slightly more than a third, after he earlier in the year put the chances at one-third, The Wall Street Journal reported in its online edition Monday.
Greenspan says there was a “very large” inventory of unsold, newly built homes putting pressure on builders to sell them quickly, the Journal reported, citing an interview with him. As a result, “We have the capability of far bigger price declines,” which will pinch home equity, lead to more defaults on sub-prime mortgages and pressure consumer spending, Greenspan says.