Former US Federal Reserve chairman Alan Greenspan yesterday said the US economy is "clearly on the edge" of a recession.

Mr Greenspan said the economy would continue to erode until there was a stabilisation of US housing prices.

"We have a long way to go" before housing prices hit a bottom, he told energy executives at a conference.

High oil prices are dragging on the economy, but the fact that they haven't done more damage shows its resiliency.

"It's a burden now," Mr Greenspan said. He added that it is "quite remarkable" the US economy is "able to do reasonably well" with oil prices near historic highs.

Crude oil futures hit above $95 a barrel (€64) on Thursday and went above $100 in early January.

Reiterating his words of last month, he said the likelihood of the US economy going into recession was "50 per cent or better".

He said the US economy was growing at "stall speed". "Stagflation is too strong a term for what we are on the edge of," Mr Greenspan said.

The subprime mortgage crisis would already have put the US into recession if US businesses weren't healthy in part as the result of years of low interest rates, he said.

"If businesses weren't in extraordinarily good shape, I have no doubt we wouldn't be asking if we're in a recession, but how long and how deep," said Mr Greenspan.

"Obviously, they are not pushed for credit."

Banks have cut back lending and will continue tight controls on borrowing until housing prices backed by subprime mortgages stabilise, said Mr Greenspan.

He made his comments in response to questions by Daniel Yergin, chairman of Cambridge Energy Research Associates, which was running the conference.

Mr Greenspan said he would like to see additional use of electric cars.

He also said nuclear power made the "most sense" to increase US power-generation when all trade-offs are weighed: "We have to use nuclear."

He said more discussion is needed before any "cap" is created as part of a US cap-and-trade carbon programme.

A carbon cap would most likely lead to lower economic activity and higher unemployment if one were set before emissions-cutting technology is widespread, Mr Greenspan said.

He doubted that technological advances would solve the problem of growing carbon dioxide emissions.

"If you don't have a significant amount to trade, a lot of people won't be able to trade and won't have the energy they need," Mr Greenspan said.