Greenspan's talk about energy today comes amid some questions about the economy's roll.

May 20, 2005: 8:06 AM EDT

NEW YORK (CNN/Money) - Big Fed chief Alan Greenspan has a lot on his mind this week.

Yesterday it was Fannie Mae and Freddie Mac and worries about what he sees as their too-big and too-risky investment portfolios (could it be that even the man who downplays the risk of a housing bubble is getting more nervous about one bursting?) Today it's energy prices, a subject he last addressed in early April saying in essence: Yes they're high but over the long term more exploration and more fuel efficiency and maybe even a less volatile geopolitical landscape will help hold them back. And he mentioned that the sheer force of rising prices is a powerful force for investment that will ultimately rein in energy prices.
Not much discussion in that speech of what sky high prices are doing to the economy now, so no reason to think he will delve into that today. But despite a big jump in jobs in April and in retail sales, questions over the momentum in the economy linger.
One striking part of first quarter GDP growth was a big jump in inventories held by businesses, and it looks like that is taking a toll on manufacturers because now they have to be worked off.
Three regional manufacturing indexes have suddenly softened -- from the Federal Reserve banks of New York, Kansas City and Philadelphia, signaling some pullback. The semiconductor book (orders) to bill (shipments that are sold) ratio is stuck well below one-to- one, a sign of softness in a key sector. Oil is back below 50 bucks a barrel, gas prices have inched down a bit from the highs, manufacturing is a small and getting smaller part of the
economy, maybe it's not a worry.
But it's something to watch because you can be sure even if Mr. G. doesn't mention it, he's watching it, too.

Find this article at:
http://money.cnn.com/2005/05/20/commentary/column_hays/hays/index.htm