Former U.S. Federal Reserve Chairman Alan Greenspan said the U.S. budget deficit remains a "significant concern" and warned the economy could slip into recession by year end, The Wall Street Journal reported Tuesday.

But he also said it is difficult to predict the timing of the recession, according to the report.

"The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world," said Greenspan while addressing a business conference.

Greenspan said that the economy has been expanding since 2001 and there are signs the economic cycle is nearing its end.

He said U.S. and global economies are more resilient to economic and financial shocks, and said that rather than predict when the next shock would occur, policy makers should create an environment where economies are capable of absorbing unforeseen negative events.

Investors' appetites for risks have led to "extraordinarily low" risk premiums on financial assets, which could pose problems, he said.

But he also said that he has seen no economic spillover effects from the slowdown in the housing market, according to a report by the Washington Post Tuesday.

"We are now well into the contraction period, and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," he said.

The U.S. economy grew at a 3.5-percent rate in the fourth quarter of 2006, up from a 2-percent pace in the third quarter.

A survey released Monday by the National Association for Business Economics showed that experts predict economic growth of 2.7 percent this year, the slowest rate since a 1.6-percent rise in 2002.

The U.S. budget deficit for the 2006 fiscal year, which ended on Sept. 30, 2006, fell to 247.7 billion dollars, the lowest in four years.

The budget deficit hit an all-time high of 413 billion dollars in 2004. The Bush administration has announced that it is planning to eliminate the deficit completely by 2012.