Does that mean the economy is on its own from here on out—unless we get a second stimulus package passed?
No. If you look out over time there are reasons to project continued economic growth, although with a weaker labor market. There are forces that continue to weigh down the economy too. Forces on the upside… there is a natural cycle to the economy and momentum tends to build. So one of things that happens is that in this report you did have strong consumption growth. That’s one of the keys to getting a self-perpetuating growth cycle, at least in the very short run. We also had strong investment and that’s crucial to a sustainable economic recovery. Consumption growth can kind of be the kindling wood that can get the fire of economic growth going, but to sustain it you need logs. Economic growth built by investment growth is more stable and long-lasting than a fire burning on consumption fumes.
What evidence is there out there that the economy can achieve strong growth without additional government stimulus?
Don’t forget that the Recovery Act will continue be injecting funds into the economy in the fourth quarter and into next year. One of the things about a recovery is that once it starts, it can create its own momentum that then builds on itself. As consumers become more confident, firms see their business prospects brightening. They invest in new plants and equipment, they hire more workers, and the process becomes more self-sustaining. One of the things we’re carefully monitoring is whether that self-generating momentum is adequate to lift the economy out of this deep downturn that we were experiencing at the end of last year.
So, if everything unfolds the way you foresee it, do you have any timetable on when the job picture might improve?
Rather than getting into that game, I think what I’d like to say is that the current state of the labor market is unacceptable in that unemployment remains too high and too many families are suffering. But rather than providing a sense of false precision of exactly when things will turn, I think the more important thing is to be working as hard as we can to accelerate that date.
What can be done in that regard? There’s talk of tax credits to businesses that do additional hiring. Is that something the White House is supports or is looking into?
I guess what I would say is that we are constantly analyzing options. We’re carefully monitoring the situation, and beyond that I don’t have anything more that I’ll say.
Thanks very much for your time.