U.S. economy looks good now simply because of rising stocks and that's going to fade, Greenspan says

Federal Reserve officials have said the economy is in a “good place” but that’s really due mainly to the recent rebound in stock prices, former Federal Reserve Chairman Alan Greenspan said Friday. “There is a bit of a stock market aura about the current economy,” Greenspan said, in an interview on CNBC. Higher stocks tend to spur real gross domestic product with a one-quarter lag, Greenspan noted. The former Fed chairman was pessimistic about the longer-run outlook. “The short run looks reasonably good, the longer run fades very dramatically, in large part because rest of the world is sinking,” he said. Year to date, the Dow Jones Industrial Average DJIA, +1.03% is up 12.1%.

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