NEW YORK (CNN/Money) - When Alan Greenspan speaks, everyone (on Wall Street, anyway) really does listen. Of course, it's hard to believe he'll be anything but cautiously optimistic on the prospects for the U.S. economy.

But with the Federal Reserve's next big policy meeting a week away, with the war over hopes building for a nice rebound in the economy, and with President Bush pushing for as big a tax cut as he can possibly get through Congress, you can't afford not to pay attention.

Econ news and analysis • SARS, China and the U.S. • Chain store sales edge up • Consumer confidence leaps • Employee costs jump

The Fed chairman is set to testify to the House Financial Services Committee on Wednesday morning at 10:00 a.m. ET.

It's being billed as a sort of update of his big bi-annual testimony on the economy from February (the one that used to be called Humphrey-Hawkins).

In that testimony Greenspan expounded on the Fed's big theme of late, which has been the impact of the war with Iraq -- before, during and after -- on the U.S. economy. In February he said "geopolitical risks" made it extra hard to tell where the economy was heading.

In general, Fed officials have said that the war with Iraq created uncertainty and kept businesses on the sidelines, too paralyzed with doubt to move ahead with hiring and investing.

With the war over, and that uncertainty gone, Fed officials no doubt believe (or at least hope and even pray) that businesses will start investing and hiring workers, and that will send consumer confidence moving higher.

Recently by Kathleen Hays Singing the paycheck blues It's the jobs, stupid Recession signals: Flashing yellow

To support that view, Greenspan can point to the nice move up in consumer confidence (albeit from pretty terrible lows), the recent move higher in durable goods orders (big ticket items like cars and computers) and, above all, some decent earnings reports and the move up in equity prices.

And it's not just stocks. The corporate bond market, a major barometer of institution's assessment of the economy and financial rise, is improving too. For many Wall Street economists that carries a lot of weight.

Now, economists also say that Greenspan will acknowledge the obvious downside risks:

Jobs are still being lost, airlines are collapsing, the SARS epidemic has taken a chunk out of the Asian economy, and investors are still wary of buying stocks as corporate wrongdoing headlines continue to hit the papers.

But even economists who think that the Fed will end up being forced to cut rates this summer don't think he'll hint at that Wednesday. Instead Greenspan will make it clear that he and his colleagues are waiting to see where the economy heads now.

Some say it will be one big political sideshow as Republicans try to get him to endorse tax cuts or at least say they won't hurt the economy, and Democrats try to get him to agree that tax cuts are not a good idea because they will boost the budget deficit and push long-term interest rates higher.

Whatever he says on that front may not matter much. First, because he isn't the one who decides if taxes get cut. And second, because President Bush has said he wants Sir Alan to stay on for another term, an invitation that the Fed chairman accepted.

But that doesn't mean it won't be amusing to watch. And you never know. There's always the chance that this most politic and careful of policymakers might surprise the markets with something unexpected. Stay tuned.

Kathleen Hays anchors The FlipSide, airing Monday to Friday on CNNfn. As part of CNN's Business News team, she is also a regular contributor to Lou Dobbs Moneyline.