Stimulus Averted Depression, Romer SaysWASHINGTON — Christina D. Romer, chairwoman of President Obama’s Council of Economic Advisers, said in a farewell speech on Wednesday that the administration’s stimulus policies averted “a second Great Depression.”
But she also gave her most detailed explanation yet for why her original forecast that unemployment would peak at 8 percent “was so far off.”
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The economic projections that were the basis for Mr. Obama’s $787 billion stimulus package of spending and tax cuts were based on data from late 2008, before Mr. Obama took office. Ms. Romer, in her speech at the National Press Club, said that she, like most analysts, had underestimated American businesses’ reaction to the near collapse of the financial system in 2008 and the global nature of the recession.
“What was not clear at the time was how quickly and strongly the financial crisis would affect the economy,” she said. Because such financial shocks are rare, she added, “to this day economists don’t fully understand why firms cut production as much as they did, and why they cut labor so much more than they normally would.”
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Unemployment claims drop for second straight weekWASHINGTON – The number of people requesting unemployment benefits declined for the second straight week, suggesting that the slowing economy isn't prompting widespread job cuts.
New claims for unemployment aid fell last week by 6,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. Economists had expected a slight increase, according to a survey by Thomson Reuters.
The four-week average of claims, a less-volatile measure, fell by 2,500 to 485,500, its first decrease after four straight increases.
Even with the declines, claims are still at much higher levels than they would be in a healthy economy. When economic output is growing rapidly and employers are hiring, claims generally drop below 400,000.
Still, some economists saw the report as mildly encouraging.
It appears "that a wave of panicked layoffs has passed, as companies have become a bit calmer in the face of the financial and economic disruptions of late spring and early summer," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.
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Strong Exports Lift U.S. Agriculture SectorEven as the broader economy falters amid signs of a weakening recovery, the nation’s agriculture sector is going strong, bolstered in part by a surge in exports, according to federal estimates of farm trade and income released on Tuesday.
The estimates confirm what economists have been saying for months: agriculture, which was generally not hit as hard by the recession as many other segments of the economy, remains a small bright spot going forward.
“We’re just having a robust rebound in the agricultural sector and promises of more growth,” Jason R. Henderson, vice president and economist at the Omaha branch of the Federal Reserve Bank of Kansas City, said in a recent interview.
The estimates show that American farmers will ship $107.5 billion in agricultural products abroad in the fiscal year that ends Sept. 30. That is the second-highest amount ever, behind the record $115.3 billion in exports logged in 2008, when commodity prices soared as the global demand for agricultural products was helped by fast-growing economies in the developing world....
“The better the demand, the higher the price, and it’s going to put another 10, 15, possibly 20 cents in the price of a bushel of corn,” said Bill Horan, a corn farmer in Iowa. Corn is about $4 a bushel, which is about 50 cents higher than last year. “It means my wife can go out and buy a new sofa, and I can put new tires on the pickup.”
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One thing is certain, President Obama stabilized the economy. The only thing standing in the way of a robust recovery is politics, and that includes those CEOs who are holding back.
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