Romer: Impact of stimulus will level off next year
The government’s economic stimulus spending has already had its biggest impact and probably won’t contribute to significant growth next year, a top White House adviser said Thursday.
Christina Romer, the chair of President Barack Obama’s Council of Economic Advisers, said the initial jolt of the $787 billion stimulus expanded the economy in the second and third quarters of this year. But she said the remaining spending will simply keep the economy from slipping.
« By mid-2010, » she said, « fiscal stimulus will likely be contributing little to further growth. » That assessment underscored the fragility of an economic recovery marked by stubbornly high unemployment.
The pace of the recovery and the unyielding jobless numbers pose significant political and policy problems for the president and for congressional Democrats who face midterm elections next year. The administration and Congress are confronting competing demands to spend more money to create additional jobs and a desire to confront rising deficits and a burgeoning national debt.
Romer said the Federal Reserve and the Treasury Department are keeping a wary eye on commercial real estate lending, an area that economists and financial experts predict could be the next crisis to befall banks, particularly smaller community institutions.