Despite tumbling stock prices, Federal Reserve chairman Alan Greenspan is confident the US economy is on course for recovery.

“The fundamentals are in place for a return to sustained healthy growth,” he declared in his half-yearly report to the Senate Banking Committee, though he cautioned that “the effects of the recent difficulties will linger for a bit longer.”

Assuming the economy sustains no further significant blows, Greenspan believes it will grow 3.5% to 4% next year.

Although his comments rallied markets briefly, they could not prevent the Dow Jones industrial average falling 166.08 points (1.9%) over the day, the seventh session in a row it has dropped.

Data sourced from: Washington Post Online; additional content by WARC staff