Romer: Econ Back From The Brink, But Still In Severe Distress
WASHINGTON -(Dow Jones)- Despite recent positive signs, the U.S. economy is
still in "severe distress" and it's too soon to begin pulling back on the
emergency measures taken to combat the recession, one of the White House's top
economic advisers warned Tuesday.
"To talk seriously about stopping policy support at a time when the
unemployment rate is nearing 10% and still rising is to risk nipping the nascent
recovery in the bud," Christina Romer, the chair of the White House Council of
Economic Advisers, said in remarks prepared for delivery to the National
Economists Club.
Romer lauded the government's "fast, bold and effective" response to the
economic crisis, which she characterized as the worst since the Great
Depression, pointing to heartening signs that industrial production, durable
goods orders and consumer spending are turning the corner. But with unemployment
likely to climb further from its current level of 9.8%, "now is not the time for
a victory lap."
"Though conditions could have been far worse given the shocks we have endured,
it is still the case that the economy is in severe distress," Romer said. "To
put it bluntly, in the year following the collapse of Lehman Brothers, the
American economy, and American workers in particular, have been through hell."
In her prepared remarks, Romer didn't touch on the potential for new stimulus
measures. She pointed to economists' expectations that economic growth will be
positive in the third quarter of 2009, but said the question will be whether
growth is strong enough to spur job creation. Real GDP growth would likely need
to exceed 2.5% for the unemployment rate to fall, she said.
The pace of the recovery, Romer said, will be crucial to policy makers'
efforts to unwind the fiscal stimulus and other rescue operations.
Romer, a chief architect of the $787 billion economic stimulus, credited the
package with boosting GDP growth by two to three percentage points in both the
second and third quarters, and boosting employment relative to what it otherwise
would have been by around one million.
Republicans question the White House's job-creation figures, saying the
stimulus package hasn't delivered on its promise.
Romer also used her remarks to push for the Obama administration's financial
regulatory reform proposals, which include new oversight powers for the Federal
Reserve and the creation of a new Consumer Financial Protection Agency.
-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@
dowjones.com
(END) Dow Jones Newswires
10-20-092015ET
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