Did I just see a trial balloon launched? Over at a Wall Street Journal conference, Christina Romer, chairman of President Obama’s Council of Economic Advisers had this to say about deficit reduction:
Watch CEA chair Christina Romer manage voter expectations:
Consistent with the recent cyclical pattern, the unemployment rate is predicted to continue rising for two quarters following the resumption of GDP growth. Whether this happens and how high the unemployment rate eventually rises will obviously depend on the strength of the GDP rebound. … With predicted growth right around two and a half percent for most of the next year and a half, movements in the unemployment rate either up or down are likely to be small. As a result, unemployment is likely to remain at its severely elevated level.
CEA Chair Christina Romer at the Chicago Fed:
The economic historian in me cringes every time I hear mention of “exit” from fiscal
stimulus and rescue operations in the current situation. “Exit strategy” is one thing—of course
we should be planning for the time when private demand has recovered and governmentstimulated
demand can be withdrawn. But to talk seriously about stopping policy support at a
time when the unemployment rate is nearing 10 percent and still rising is to risk nipping the
nascent recovery in the bud.
White House economist Christina Romer says government stimulus is “going to ramp up strongly through the summer and the fall.” This implies that a lack of stimulus explains the poor economy — not that the Obama stimulus plan is simply not working. Yet what stimulus is flowing into the economy isn’t working, as many predicted — including me and Milton Friedman. Listen to Gluskin Sheff economist David Rosenberg (bold is mine):