There is no doubt the U.S. economy is in recession, caused by slowing consumption spending and excessive debt, said former Federal Reserve Chairman Paul Volcker on Tuesday.

"I don't think there is any doubt we are in a recession," Volcker said in Miami Beach, Florida. "We should have seen it coming."

This isn't the first time the former Fed chief has used the R-word.

Writing an Op-Ed in the Wall Street Journal on Oct. 10, Volcker said the financial crisis was at a critical point, and he called a recession inevitable.

"For months, the real economy, apart from housing, had not been much affected by the developing crisis. Now, a full-scale recession appears unavoidable," he wrote. "Important state and local governments face deficits they may be unable to finance. Recessionary forces are apparent in other important countries and exchange rates are unstable."



On Oct. 6, Volcker said current Fed Chairman Ben Bernanke was doing an admirable job in handling the crisis and that the Treasury's response to the crisis has been "appropriate given the risks."

He added: "The Treasury has become lender of last resort in the United States, which I think is appropriate in this particular crisis when the value of assets is at risk."

Volcker, who presided as Fed chief from 1979 to 1987, is now the board chairman for the Group of 30, an international body of central bank governors, top economists, and private financial experts.

By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2008