White House Discusses Nation’s Economy

Economic weatherman, Orszag, gives encouraging forecast

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.

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  • marcus

    Everyone is worried about jobs going overseas, but I think should they should be more optimistic. America is great for generating new jobs and dealing with change. My grandfather said railroads once lost a lot of business when electric companies switched from burning coal to nuclear power. Railroads also needed less workers when trains stopped using cabooses. Yet while some railroad jobs may have disappeared, new jobs like webpage designers and video store clerks have appeared. Horse buggy manufacturers became car manufacturers and typewriter companies now make computers. Many industries that were supposed to disappear like movie theatres due to VCR’s and accounting because of computers have never been stronger.

    While manufacturing jobs may go overseas to cheaper locations, the United States still manufactures more than any other country.

    http://investing.curiouscatblog.net/2009/10/13/data-on-the-largest-manufacturing-countries-in-2008/

    Even if more jobs go abroad, the USA will always have factories. I highly doubt that the United States will buy fighter jets from China. The price of labor may be cheaper in Asia now, but as oil and shipping prices rise, buying American products will not seem to be so expensive. Chinese products also have a reputation for poor quality and counterfeiting. BMW does not worry that Chinese car companies will steal their customers.

    Many jobs cannot be outsourced, either. You are not likely to call a doctor, lawyer, mechanic, mover, driver, barber, electrician, locksmith, real estate agent, or plumber in China to fix a problem you have in the USA. Are all the farms, mines, stores, hotels, museums, restaurants, churches, security guards, banks, government workers, schools, and athletes in the US going to be shipped overseas, too?

    Even if all the manufacturing jobs in the United States went to China, wouldn’t the Chinese need American skills? Americans are creative. Do you think China will be known as the new Disney and Hollywood? Will China become famous for apple pies, hamburgers, hot dogs, baseball, gun rights, democracy, free speech, and religious freedom?

    While change is sometimes scary and being cautious is good, hysteria is not. Think for yourself and don’t be a Chicken Little.

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