Harvardâs Feldstein Sees Risk of âDouble-Dipâ Recession in U.S.
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http://www.bloomberg.com/apps/news?pid=20601087&sid=a3IpfKeeveVM
By Bob Willis and Betty Liu
Martin Feldstein: Former head of the National Bureau of Economic Research and Reagan administration adviser
July 21 (Bloomberg) -- The U.S. recession may not be coming to an end and there is a risk the economy may experience a âdouble-dipâ contraction, said Martin Feldstein, a professor of economics at Harvard University.
âThere is a real danger this is going to be a double dip and that after six months or so weâll have some more bad news,â Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. âWe could slide down again in the fourth quarter.â
The economy could âflatten outâ or âeven be positiveâ in the third quarter, and then itâs likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.
âThere isnât going to be enough to sustain a really solid recovery,â he said, even though recent data has provided some âgood newsâ on the economy.
Feldstein said Federal Reserve Chairman Ben S. Bernanke, whose term in office as chairman expires Jan. 31, should be reappointed to a second four-year term by President Barack Obama.
Bernanke has âdone a very good job and I think he should be reappointed,â Feldstein said. Bernanke is due to present his semi-annual monetary-policy testimony to Congress today.
Feldstein said Bernanke in his testimony today would have to âreassure the Congress and the publicâ that inflation wonât be allowed to get out of control following the reduction in interest rates and the addition of liquidity to credit markets.
He said there âare a number of technical waysâ that the Fed can contain inflation and that it would be politically difficult to increase borrowing costs at a time of high unemployment, Feldstein said.
To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net.
Last Updated: July 21, 2009 09:36 EDT
Share | Email | Print | A A A
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3IpfKeeveVM
By Bob Willis and Betty Liu
Martin Feldstein: Former head of the National Bureau of Economic Research and Reagan administration adviser
July 21 (Bloomberg) -- The U.S. recession may not be coming to an end and there is a risk the economy may experience a âdouble-dipâ contraction, said Martin Feldstein, a professor of economics at Harvard University.
âThere is a real danger this is going to be a double dip and that after six months or so weâll have some more bad news,â Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. âWe could slide down again in the fourth quarter.â
The economy could âflatten outâ or âeven be positiveâ in the third quarter, and then itâs likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.
âThere isnât going to be enough to sustain a really solid recovery,â he said, even though recent data has provided some âgood newsâ on the economy.
Feldstein said Federal Reserve Chairman Ben S. Bernanke, whose term in office as chairman expires Jan. 31, should be reappointed to a second four-year term by President Barack Obama.
Bernanke has âdone a very good job and I think he should be reappointed,â Feldstein said. Bernanke is due to present his semi-annual monetary-policy testimony to Congress today.
Feldstein said Bernanke in his testimony today would have to âreassure the Congress and the publicâ that inflation wonât be allowed to get out of control following the reduction in interest rates and the addition of liquidity to credit markets.
He said there âare a number of technical waysâ that the Fed can contain inflation and that it would be politically difficult to increase borrowing costs at a time of high unemployment, Feldstein said.
To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net.
Last Updated: July 21, 2009 09:36 EDT