Federal Reserve Chairman Alan Greenspan may be the most powerful unelected official in Washington and the most powerful person period when it comes to guiding the U.S. economy. The choices Greenspan makes can rev or slow the economy, raise or lower inflation and create conditions that will help people get jobs -- or help them lose them. Greenspan began his third four-year term as Fed chairman in June 1996.
Many people place a large share of the credit at Greenspan's feet. His main task over the past two years has been to take 1994's too-hot economy and give it a "soft landing" that wouldn't throw the country into a recession.
One of the biggest factors in President Bill Clinton's easy ride to re-election was the strength of the economy. The big question for Greenspan and Clinton as they head into 1997 is whether the country is nearing the end of a natural economic cycle, and must at some point dip into recession, or whether the current clip can be maintained indefinitely.
Greenspan's actions sometimes irritate the Clinton Administration, which would like to see a bit faster growth and a bit lower interest rates. But those can lead to high inflation, which Greenspan abhors above all else.
The chairman is wildly popular with the business community; a March 1996 survey by Fortune magazine showed that 96 percent of the "Fortune 1,000" chief executives backed his reappointment. Half of them gave him an "A" grade, and almost all the rest gave him a "B."
Greenspan has served and received support from presidents of all stripes. He was chairman of the President's Council of Economic Advisers under Gerald Ford from 1974 to 1977. From 1981 to 1983, he served as Chairman of the National Commission on Social Security Reform for Ronald Reagan.
Greenspan was appointed to the Federal Reserve Board in 1987 by Reagan, who made him chairman in 1988. He was re-appointed as chairman by George Bush and Bill Clinton.
As Fed chairman, Greenspan heads up two committees: its Board of Governors, which handles regulation and administrative matters, and its Federal Open Market Committee, which holds the real sway over the economy. One of its areas of influence is deciding at what interest rates the government will lend out money, a decision that can speed up or slow down the economy, and can raise or lower inflation rates. (More about the Federal Reserve System.)
Updated Mar. 3, 1997
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