Former Fed Chairman Alan Greenspan said on Sunday that the U.S. economy was "getting close" to the point where it would stop losing jobs. But during his appearance on ABC's This Week with George Stephanopoulos, Greenspan also predicted that the level of unemployment would "penetrate the ten percent barrier" and stay at the level for some time before going down. Despite it all, he stressed, the administration shouldn't push for a second stimulus package to spur job growth.
Speaking days after it was announced that 263,000 jobs had been lost in September -- vaulting the unemployment rate to a 26-year high of 9.8 percent -- Greenspan was able to muster a bit of cautious optimism about the economy. He predicted that economic growth in the third quarter of this year would end up greater than his previously predicted 2.5 percent. "The numbers are coming in higher than that," he said.
On the job market front, however, there were not many rays of sunshine. Asked whether a second stimulus package was needed to kick-start additional growth, Greenspan was skeptical, saying at one point that "in trying to do too much you can actually become counterproductive."
"We are in a recovery and I think it would be a mistake to say the September numbers alter that significantly," he said. "It is true the last couple of weeks some of the numbers coming in have been a little bit soft. But this is what a recovery looks like."
There should be "no new stimulus for two reasons," he concluded.
"One is only 40 percent of the first stimulus has been in place," said Greenspan. "And there is a considerable debate going on in the economics profession about how effective this stimulus package is. And so, mainly because of the fact that as broad as it is and as effective as it will turn out to be you still have 60 percent left to go. In my judgment it is far better to wait and see how this momentum that has already begun to develop in the economy carries forward."
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