The U.S. economy will grow more than expected in the third quarter, but unemployment also will continue to increase and will pass 10 per cent, former Federal Reserve Chairman Alan Greenspan said Sunday.
Former Fed Chairman Alan Greenspan, shown here in 2008, says “temporary actions” can help the jobless.
Greenspan told the ABC program This Week that he expected three per cent growth in the third quarter, up from the 2.5 per cent he previously predicted. However, he said a “pretty awful” September employment report showed the jobless rate continued to climb.
A slowing or halt in job losses is different from reversing the rise in unemployment, Greenspan noted, adding that the nation’s unemployment rate — currently 9.8 per cent – is “going to penetrate the 10 per cent barrier before heading down.”
That prediction matches previous comments by President Obama and others, who say that unemployment is a lagging indicator in an economic recovery.
Obama said Saturday his administration would focus on job creation, and Greenspan said he supported that approach. However, Greenspan said it was too soon to consider another economic stimulus package or other major spending plan.
“We are in a recovery, and I think it would be a mistake to say the September numbers alter that significantly,” Greenspan said, adding: “This is what a recovery looks like.”
Greenspan noted that only 40 per cent of the $787 billion in Obama’s first stimulus package has been spent, and he said it was helping to create momentum for the economic recovery. In particular, he cited his prediction of higher-than-expected third quarter growth.
“It looks as though it’s going to be three per cent, possibly even higher,” Greenspan said.
At the same time, Greenspan endorsed some short-term steps to help the unemployment situation, including extending jobless benefits.