Federal Reserve chief Alan Greenspan’s latest comments on the economy were slightly less positive than he was last week.

Greenspan spoke tody before the Independent Community Bankers of America in Honolulu. He voiced optimism on the economy and noted the employment picture has improved..

“As I have noted in recent testimony, in the past several months, we have seen increasing signs that some of the forces restraining the economy over the past year are starting to diminish and that activity is beginning to firm,” he said.

He suggested that the inventory liquidation is nearing an end. “With production running well below sales, the lift to income and spending from the inevitable cessation of inventory liquidation could be significant,” he noted. “But that impetus to the growth of activity will be short-lived unless sustained increases in final demand kick in before the positive effects of the swing from inventory liquidation dissipate. In recent days, encouraging signs of strengthening underlying trends in final demand have emerged, although the dimensions of the pickup remain uncertain.”

He added that more business spending and consumer saving are needed in the economic recovery.

“The dynamics of inventory investment and the balance of factors influencing consumer demand will have important consequences for the economic outlook in coming months. But the broad contours of the present cycle have been, and will continue to be, driven by the evolution of corporate profits and capital investment,” he said.