Obama Says U.S. Must Avoid Removing Economic Stimulus Too Soon
President Barack Obama said recent data suggest the U.S. economy is returning to growth and the administration must avoid removing stimulus programs prematurely.
“All the indicators would tend to suggest that we’re starting to see growth,” Obama said today in a Bloomberg Television interview. “What we have to be careful of is taking the crutches away from the patient too early.”
The White House last week said it expects the $787 billion stimulus to add as many as 3 percentage points to growth in July through September, and it credited the initiative with creating or saving as many as 1.1 million jobs. Obama signed the fiscal spending package into law in February.
“We want to get out of some of these extraordinary interventions as quickly as possible but not so soon that the recovery doesn’t take place,” Obama said. “We have to make sure that we avoid” a second recession, he said.
Economists put the odds of a double-dip recession in the next 12 months at 25 percent, according to the median estimate in a monthly Bloomberg News survey taken from Sept. 3 to Sept. 10. The previous forecast called for a 20 percent chance of the economy backsliding after it expands.
The U.S. economy will grow at a 2.9 percent annual rate in July through September, the Bloomberg survey showed. Growth is projected to slow to a 2.2 percent pace during the last three months of the year as consumer spending weakens during the holiday shopping season, when many stores expect to reap half of their annual revenue.
Economic Contraction
The world’s largest economy contracted 1 percent from April through June, according to the Commerce Department. The drop was the fourth in a row, making it the longest contraction since quarterly records began in 1947.
The unemployment rate last month jumped to 9.7 percent, a 26-year high, from 9.4 percent in July, the Labor Department said. Economists surveyed by Bloomberg this month forecast the jobless rate will reach 10 percent by the end of the year.
“We’ve seen steady declines in the number of people who are losing their jobs each month,” Obama said. “We’re seeing a bottoming out and potentially we could start seeing some positive job growth.”
Since the recession began in December 2007, the U.S. has lost 6.9 million jobs. Payroll cuts peaked at 741,000 in January and have since subsided, with 216,000 job losses in August, according to the Labor Department.