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Word has it that instead of coming from



Alan Greenspan

, this year's


testimony is going to be bellowed at Congress members by actor

James Earl Jones


Well, maybe not. But it would shake up an appearance that could hold fewer surprises than usual. With the Fed already on a tightening binge, tomorrow's semiannual testimony isn't expected to signal a change in that approach.

At least one, if not two or more, additional rate hikes already seem to be in the offing, and Fed watchers say Greenspan isn't likely to deviate from his well-developed theme of recognizing productivity improvements but countering that with talk of an unsustainable rate of consumer demand.

The key is how hard he presses the latter point.

"If he spends more time on how the limitations of this situation play out -- in the form of more pressure in the labor market -- he will be implying that he is determined to tighten as much as he needs to get a soft landing this year," says David Jones, chief economist at

Aubrey G. Lanston


In recent speeches, such as his Jan. 13

address to the

Economic Club of New York

, Greenspan's tossed a few warm-up pitches, marveling at the economy's ability to grow without producing significant wage and price inflation, before bringing the heat.

"Through the so-called 'wealth effect,'

productivity-driven gains in supply have tended to foster increases in aggregate demand beyond the increases in supply," Greenspan said late in that speech. "It is this imbalance between growth of supply and growth of demand that contains the potential seeds of rising inflationary and financial pressures that could undermine the current expansion."

Mark Wanshel, senior economist at

J.P. Morgan

, doesn't believe that view has changed in a month. Despite the 5% surge in


in the third and fourth quarters (the best since 1992), he thinks the Fed chairman remains more concerned about wealth-driven spending and the potential imbalances it poses.

But in light of the recent productivity release, Wanshel and Jones believe the Fed might temper its aggressiveness a bit. Jones originally figured the

fed funds target

would rise to 6.25% or 6.5% by midyear from the current 5.75%; he thinks 6% to 6.25% is more likely now. Wanshel's still looking for 6.5% by midyear, but he admits it's "conditional on solid economic numbers over the next month."

Activity in the Treasury market tends to be volatile after Greenspan's semiannual testimony, but Wanshel believes the short end of the Treasury curve reflects expectations for harsh words from Greenspan. The stock market is more of a wild card. Greenspan is likely to engage in some saber-rattling by expressing concerns about the level of speculation and existing margin risk, but equities usually slough that off.

"Stocks will behave in direct proportion to how much good news he puts on productivity and on how much he blames on growth being too fast," Jones says.