Top Economist Says Unemployment Could Peak at 10.5 Percent

Posted on October 12, 2009. Filed under: unemployment | Tags: , , , , |

Mark Zandi warns on “FOX News Sunday” that the recovery will continue to be “halting” and “fragile,” backing up estimates from other economists that show unemployment peaking next summer and hovering above 8 percent four years down the road.

Unemployment will continue to rise and could peak at 10.5 percent, one of the nation’s top economists said Sunday. 

Mark Zandi, co-founder of Moody’s Economy.com, warned on “FOX News Sunday” that the recovery will continue to be “halting” and “fragile,” backing up estimates from other economists that show unemployment peaking next summer and hovering above eight percent four years down the road. New figures released last week showed unemployment rose to 9.8 percent in September, the highest since 1983. 

But Zandi, one of the foremost economists cited by the Obama administration and Congress during the push for the $787 billion economic stimulus package in February, argued that despite the dismal economic predictions the recovery package was still a success and has prevented a massive problem from becoming even worse. 

“10.5 percent is a very reasonable expectation for the peak in unemployment, but I think it would be measurably higher if not for the stimulus package,” Zandi said. “The stimulus in my view is working. It’s just gotten overwhelmed by the magnitude of the economic crisis.” 

Zandi said the presumably slow recovery means stimulus benefits should be extended into 2010. 

He said unemployment benefits, first-time home buyer credits and state aid should all be continued. 

“If you’ve got 10 percent-plus unemployment, people are going to be out of work. They’re going to need more help,” he said. 

Michigan Gov. Jennifer Granholm, whose state’s unemployment rate is the highest in the nation at 15.2 percent, agreed that unemployment benefits should be extended. The Democratic governor said that the stimulus has helped, even though “unemployment is at a ridiculously high level.” 

But Indiana Gov. Mitch Daniels said the stimulus has not yielded the benefits it advertised months ago. 

“It’s coming very slowly, if at all,” the Republican told “FOX News Sunday.” “The stimulus, I didn’t oppose the idea of it, but I don’t think you can point to much effect so far.” 

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Democrats’ Offer Economic Relief Proposals, but Don’t Call It a Second Stimulus

Posted on October 10, 2009. Filed under: Congress | Tags: , , , , |

WASHINGTON — Confronted with big job losses and no sign the U.S. economy is ready to stand on its own, Democrats are working on a growing list of relief efforts, leaving for later how to pay for them, or whether even to bother.

Proposals include extending and perhaps expanding a popular tax credit for first-time home buyers, and creating a new credit for companies that add jobs. Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don’t want to call it that.

Democratic leaders in Congress and the White House say they have no appetite for another big spending package that adds to the federal budget deficit, which hit a record $1.4 trillion for the budget year that ended last week.

But with unemployment reaching nearly 10 percent, 

many lawmakers are feeling pressure to act. Some of the proposals come from the Republicans’ playbook and focus on tax cuts, even though they, too, would swell the deficit.

“We have to do something for the unemployed, politically and economically,” said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee.

The House already has voted to extend unemployment benefits an additional 13 weeks for laid off workers in the 27 states where the jobless rate is 8.5 percent or above. Senate Democrats reached a deal Thursday to extend the benefits an additional 14 weeks in every state. Both proposals are paid for by extending a federal unemployment tax.

Also on the table: extending subsidies for laid-off workers to help them keep the health insurance their former employers provided, known as COBRA. The current program, which covers workers laid off through the end of the year, costs nearly $25 billion.

Congressional leaders haven’t settled on the length of an extension, or how to pay for it.

Several bills would issue extra payments to the more than 50 million Social Security recipients, to make up for the lack of a cost-of-living increase next year. One bill would set the one-time payments at $250, matching the amount paid to Social Security recipients and railroad retirees as part of the stimulus package enacted in February.

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