Archive for the ‘growth’ Category

Will the stimulus bill boost public confidence?

February 12, 2009

One goal of the $800-plus billion economic stimulus package is to give Americans a lift, a sense that Uncle Sam has a solution to today’s economic woes.

But will the plan provide a break from the steady onslaught of gloom – from a dizzy stock market to continuing problems of the big banks? Will it give people confidence to buy new cars or perhaps just splurge a little?

Some public opinion seers suggest it might help, perhaps showing that the new president and Congress can accomplish something. Other poll watchers, though, caution that the public has low expectations, with a large number of people feeling the package won’t have much effect on them.

By Ron Scherer
Christian Science Monitor

“It might be less than you hoped but better than nothing,” says Dennis Jacobe, chief economist at the Gallup Organization.

But pollster John Zogby says once President Obama signs the stimulus package, it can be viewed as action.

“The bottom line is Americans are looking for the president and Congress to get together and make something happen, and the action part is greater than the specifics,” says Mr. Zogby, president and CEO of Zogby International.

Great expectations? No.

The most recent Gallup numbers certainly show the public has modest expectations. Only 12 percent think it will make the economy “a lot better,” and 32 percent believe it will make it “a little better.” However, 41 percent think it will have no effect and 12 percent think it will be worse.

“There can be some psychological effect but how long it can last is another issue,” says Mr. Jacobe.

Mr. Obama realizes he needs to build support for the massive bill. That’s one of the reasons he held a prime-time press conference on Monday evening to make his case for his approach and will travel Thursday to Peoria, Ill., after town hall meetings in Fort Myers, Fla., and Elkhart, Ind., earlier this week.

Past presidents have gone to the people to try to marshal support for their legislation. Zogby recalls former President Lyndon Johnson campaigning for the 1964 Civil Rights Act, which was not particularly popular among conservative members of Congress. “In his State of the Union address, he told them, ‘My predecessor [President John F. Kennedy] wanted this passed,’ and it was passed by April,” says Zogby, the author of the recent book, “The Way We’ll Be.”

Obama rhetoric

Jacobe says one of the problems for Obama is that to spur lawmakers he has had to talk about the depressed state of the economy. For example, in December, as president-elect he warned Americans that the economic news was going to get worse before it gets better.

“It’s really tough to get confidence in the future when you are dropping 150,000 jobs a week,” says Jacobe.

In Atlanta, some of the newly unemployed are only somewhat buoyed by the stimulus bill. Floyd Dorsey, who lost his job at a warehouse, says the stimulus bill amounts to a welcome “investment in America.”

But will it help his situation directly? “I don’t think so,” he says. “It’s not going to solve anything for a year or two.”

Read the rest:
http://features.csmonitor.com/economyrebuild/2
009/02/11/will-the-stimulus-bill-boost-public-
confidence/

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Mitt Romney: Stimulate Economy, Not Government

February 6, 2009

Mitt Romney ran several businesses, he understands economics and he was a conservative Republican elected to be Governor of Massachusetts — a very liberal Democratic state.

So he might know a thing or two about the stimulus now kicking around Washington DC.

“The Obama spending bill would stimulate the government, not the economy,” he says.

This caught my eye because I’ve been following the economic meltdown in California.  In that state, the only economic sectors that “grew” last year were health care and government.

That means the employers hiring people were hiring health care or government workers: not workers in factories, those involved in say, trade, like seaport workers; or other kinds of skilled professionals.

Even the Silicon Valley workforce was not growing as fast as the government.

After the stimulus we might see this growth in government nation wide — which is part of the reason that governors and mayors like this stimulus.

But why doesn’t Romney like the stimulus, as a former governor?

“As someone who spent a career in the private sector, I’d like to see a stimulus package that respects the productivity and genius of the American people. And experience shows us what it should look like,” Romney says.

In other words, companies that hire things and sell things make for more real growth than a growing government.

Romney has a very good view of the stimulus which is on CNN:

any new spending must be strictly limited to projects that are essential. How do we define essential? Well, a good rule is that the projects we fund in a stimulus should be legitimate government priorities that would have been carried out in the future anyway, and are simply being moved up to create those jobs now.

As we take out nonessential projects, we should focus on funding the real needs of government that will have immediate impact. And what better place to begin than repairing and replacing military equipment that was damaged or destroyed in Kuwait, Iraq and Afghanistan?

Third, sending out rebate checks to citizens and businesses is not a tax cut. The media bought this line so far, but they’ve got it wrong. Checks in the mail are refunds, not tax cuts. We tried rebate checks in 2008 and they did virtually nothing to jump-start the economy. Disposable income went up, but consumption hardly moved.

Businesses aren’t stupid. They’re not going to invest in equipment and new hires for a one-time, short-term blip. What’s needed are permanent rate cuts on individuals and businesses.

Read it all:
http://www.cnn.com/2009/POLITICS/0
2/06/romney.stimulus/index.html

Stimulus: Will Some Republicans Join the President?

January 29, 2009

Ronald Reagan didn’t believe in more government spending.  He believed in less.  He didn’t believe in more government money through taxes.  He believed in tax cuts.

And that worked: for America and for Republicans.

Any Democrat can tell you that George W. Bush got America way off track.  But a real Republican would say, the bloated Bush budgets created his downfall and hurt the Republican Party.

Now the question is: can Barack Obama lure some Senate Republicans to vote for his House passed stimulus, to get that “bipartisan” seal of approval.

Every Republican in the House voted against the president’s bill, along with 11 Democrats.

The White House hopes some pork will be romoved from the stimulus in the Senate to win over some Republicans….

Related:
Old Republican Mantra May Be the New One Too: Smaller Government Means Better Economy?

From CNN:
http://www.cnn.com/2009/POLITICS
/01/29/rallying.gop/index.html

Will the GOP Compromise?
http://www.cnn.com/2009/POLITICS
/01/29/stimulus.next/index.html

**********

If you knew economic growth and new job creation begin to slow when total government spending is larger than about 25 percent of the economy, and you knew total government spending in the United States is about 36 percent of gross domestic product (GDP), would you propose policies to make government larger or smaller to create more jobs and boost economic growth?

By Richard Rahn
The Washington Times

Over the last few decades, many economists have done studies on the “optimum” size of government. A new study just completed shows the optimum size of government is less than 25 percent of GDP.

Optimum is defined as that point just before government becomes so large as to reduce the rate of economic growth and job creation. Governments are created to protect people and property. A government too small to establish the rule of law and protect people and their property from both foreign and domestic enemies is less than optimal.

The American Founding Fathers also believed government had public health functions (as contrasted with spending on private health), such as draining swamps where malaria-infected mosquitos thrived; and some public works functions (e.g. building and maintaining roads, and ensuring basic education – but not necessarily state-operated schools).

Read the rest:
http://www.washingtontimes.com/news/200
9/jan/29/the-optimum-government/

Close to half of the stimulus goes to entities that sponsor or employ or both members of the Service Employees International Union, federal, state, and municipal employee unions, or other Democrat-controlled unions.

See:
 Stimulus: “truly responsible government only a distant echo of our forgotten ancestors”

Economists Say “Stimulus Spending is Dead Wrong” for Economy

In China, Year of the Ox Promises Prosperity, But Economy Continues to Slow

January 23, 2009

This month, the best Chinese New Year gift for a businessman fighting the economic crisis is a toy ox — a charm for prosperity as China’s economy battles a historic low.

On Thursday, Beijing revealed that economic growth for 2008 had slipped to nine per cent, with a 6.8 per cent slowdown in the fourth quarter. Nine per cent would be one of India’s best runs. But for China, it was the lowest pace since 2001 and the first single-digit growth since 2003.

In 2007, China grew at 13 per cent and leapfrogged to become the world’s third-largest economy. 

So the atheist Chinese are hoping the year of the ox will usher a change of fortune. The ox follows the rat as the second of 12 animals in the Chinese zodiac. It signifies prosperity through diligence and hard work.

“I sell about 15 pieces of stuffed ox every day,’” Chen Tao, who runs a closet-sized store in an eight-century-old alley, told HT. “People want an ox with the Chinese character of money and fortune on its back, as a gift for businessmen.”

While this correspondent chatted with Chen, a Chinese woman spent over 200 yuan (about Rs 1,400) on red and blue toy oxen for the New Year holiday starting on Sunday. “Let there be ox,” said a sign on the door of a bar in the historic alley.

In the building housing HT’s Beijing bureau, office-goers in business suits are seen walking with the stuffed toy with horns.

A struggling new bank branch has propped a life-size cutout of a trendy couple with ox and cow faces.

The flagging US coffee chain Starbucks hopes for prosperity with its latest China product: a stuffed ox priced at over Rs 1,100.

–Hundustan Times

Obama’s Responsibility, Mandate To Make The American System and Economy Work

January 21, 2009

Everybody in the world knows we are in a global financial crisis like never before.

Many in the world are looking to America for strength and solutions.  And as of this morning people are looking to Barack Obama.

And the American people have given Barack Obama a mandate to solve the problem.

“That we are in the midst of crisis is now well understood,” the President said during his Inaugural Day Address.

Former Secretary of State and Chairman of the Joint Chiefs of Staff Colin Powell said, “The American people I think fundamentally bet on President Obama because of the economic situation we are in.”
.
“The stock market dropped another 300 points on this glorious Inauguration Day and people are losing jobs, and that will be No. 1 for him,” Powell said.

America is inching each day closer to an economic stimulus that will give our children and grandchildren more than $2 Trillion in debt.

Yet no one is certain the stimulus will work.

If there is doubt that the American economy will recover as a result of the actions we are taking, we are either taking the wrong actions or we need to ask ourselves “what else should be done? What should we do differently?”

There will be no national security without a strong American economy.  No social security.  No health care.

A news story yesterday said the only segments of the California economy showing “growth” were in the sectors of government and  medical services.  That won’t produce “wealth” for future investment….

If we all believe in the American System of Government, and I sure do, why are we not tasking Congress to create solutions?  After the stimulus is passed, where is “Plan B”?  Why aren’t Nancy Pelosi and Harry Reid being asked to shut down all the small talk and crap and hold hearings that will give the experts of the world a chance to give the Congress new ideas?

Yesterday the President told us, “America has carried on not simply because of the skill or vision of those in high office, but because we the people have remained faithful to the ideals of our forebears, and true to our founding documents.”

Time to end politics as usual….

Experts around tables in the White House are great and we all applaud “Blue Ribbon” committees; but where is our use of our time-tested system?

Time to make it work for us….

“Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America — they will be met.”

Time for action.  Enough with the foolishness and fal-de-ral…

President Obama renewed his call for a massive plan to stimulate economic growth.

Obama Inauguration: Unforgettable Moment, ‘Subdued’ Speech

January 21, 2009

Unforgettable. Historic.  A massive outpouring of feeling, emotion, joy.  High hopes.  The throng of crowds and watchers world-wide.

That’s the lasting memory of Barack Obama’s Inauguration Day, January 20, 2009.

Much was tied to race in America, the shadow of slavery somehow mythically lifted, renewed hope and promise.

How could words meet the expectation? The moment?

Political speech writers and the politicians themselves cannot lip synch like rock stars what worked before.  Most Americans know the words to Barack’s Greatest Hits; so how can that be surpassed?

It has to be surpassed by history not yet written, not yet made.

The inauguration speech was a little like a Bono concert in an acoustically flawed arena; or with a bad back up group.  It lacked greatness.

Gerard Baker of The Times in London was looking for some “Kennedy-esque, or Rooseveltian quotations for the ages.”

Bill Schneider of CNN wrote it was “the right speech for the times.”

Peggy Noonan said, “the Inaugural Address itself was somewhat subdued.”

I, too, longed to find the words that would one day be etched into granite, like “Ask not what your country can do for you….”

So maybe this was not the time nor the place for such a speech that would always be overshadowed by the moment, the feeling, the history anyway….

On days like this, speeches can become covenants.  So maybe Barack Obama was smart enough to know, the words future generations remember, the words that record his greatness contributed to America,  the words someday etched  into stone, are yet to come.

John E. Carey
Wakefield Chapel, Virginia

U.S. President Barack Obama (R) gets a thumbs up from his daughter ...               
U.S. President Barack Obama (R) gets a thumbs up from his daughter Sasha after taking the Oath of Office as the 44th President of the United States, during the inauguration ceremony in Washington January 20, 2009.REUTERS/Brian Snyder (UNITED STATES)

Related:
Obama Delivers A Speech of Realism that Failed To Hit the Heights

Text of President Barack Obama’s inaugural address 

President Obama’s Inaugural Speech: “The time has come to set aside childish things”

The expectations were high:
Obama: Nation’s Hopes Never Higher, Times Seldom Tougher, Give Us Your Highest Vision

CNN (Bill Schneider):
http://edition.cnn.com/2009/POLITICS/
01/20/schneider.obama.speech/index.html

Peggy Noonan:
http://online.wsj.com/article/SB1232
48758908299555.html

President Barack Obama, the 44th President of the United States, ... 

Obama’s first words — “I stand here today humbled by the task before us” — echoed the first paragraph of the first inaugural address.

“He is as much symbol as substance, an icon for the youth and a sign of deliverance for an older generation that never believed a man with his skin color would ascend those steps,” said the International Herald Tribune.

What a great moment!

CNN:
http://edition.cnn.com/2009/POLITICS/01
/21/obama.international.press.reaction
/index.html

Obama Delivers A Speech of Realism that Failed To Hit the Heights

January 21, 2009

In the historic vastness of the moment, the unique and unprecedented nature of the event, there was always a risk that the message itself would be overshadowed. At the swearing-in of America’s first African-American President, amid crowds on a scale never witnessed before in Washington, and in all the usual pomp and pageantry of a presidential inauguration, the great set-piece inaugural speech – even from a highly accomplished orator – was in danger of being eclipsed.

But this was Barack Obama, now President Barack Obama, and if anyone’s oratory can rise to even the highest occasion, it is surely his.

And yet, perhaps because the US is confronting its gravest set of circumstances in at least a generation, and perhaps because of the weight of expectations of all those millions of people waiting for a touch of the magic of his famed rhetoric, this was not an occasion on which his oratory soared.

By Gerard Baker
Times (UK)

There were few truly memorable pieces of phraseology – no Kennedy-esque, or Rooseveltian quotations for the ages.

He laboured hard to echo the tone and cadence of his biggest campaign performances. And there was more than a hint of a self-conscious echo – distractingly – of the speeches of his hero and fellow Illinoisan, Abraham Lincoln.

The language in particular sounded decidedly 19th century in parts – all those commands to “know” some or other intent of US policy, all those glancing biblical references.

But it wasn’t up to Lincoln’s standards – which perhaps is asking too much. In fact, it may not have been really memorable at all. It’s unlikely that most people will remember a phrase from it a few weeks from now, let alone a century. In fairness it was a speech more obviously measured to the practical immensity of the immediate challenges. It was directed at two audiences: a hopeful but anxious one at home, and an uncertain but hopeful one overseas.

To the global audience, Mr Obama signalled, perhaps more sharply than expected, the different path he intends to take from that of his predecessor.

In remarks that presaged important policy announcements in the next few days, President Obama indicated that the way he prosecutes the war on terrorism will change markedly from George W. Bush’s approach.

“As for our common defence, we reject as false the choice between our safety and our ideals.” In the next few days he is expected to order the eventual closure of the Guantánamo Bay prison camp and to bar harsh interrogation treatment of detainees.

“Those ideals still light the world, and we will not give them up for expediency’s sake. And so to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more.”

And though Mr Obama warned terrorists that the US would pursue and defeat them, and he promised to disengage from Iraq and achieve victory in Afghanistan, perhaps most striking was the distinction between Mr Obama’s inaugural tone and that of Mr Bush’s second inauguration four years ago.

There was no reference yesterday to committing the US to the eradication of tyranny in the world. Instead, Mr Obama contented himself with warning tyrants that they were on “the wrong side of history”.

But the bulk of his speech, and his focus, was on the domestic challenges facing his Administration. All new presidents like to convey the message that the country is in desperate need of a new direction, even when things are going swimmingly. But no one seriously questions the scale of the economic mess that now confronts the US and the loss of national self-confidence is almost palpable.

Mr Obama promised that an activist Government would move quickly on a massive stimulus programme of public spending. But he asked for patience from the American people, warning that it would take time for measures to work. The new President also warned

Worst U.S. Stocks Slide in Inauguration Day History

January 21, 2009

U.S. stocks sank, sending the Dow Jones Industrial Average to its worst Inauguration Day decline, as speculation banks must raise more capital sent financial shares to an almost 14-year low.

State Street Corp., the largest money manager for institutions, tumbled 59 percent after unrealized bond losses almost doubled. Wells Fargo & Co. and Bank of America Corp. slumped more than 23 percent on an analyst’s prediction that they’ll need to take steps to shore up their balance sheets. The Dow’s 4 percent slide was the most on an Inauguration Day in the measure’s 112-year history, according to data compiled by Bloomberg and the Stock Trader’s Almanac.

“All the banks are going to have to recapitalize,” said Greg Woodard, portfolio strategist at Manning & Napier Advisors Inc., which manages $16 billion in Fairport, New York. “That’s not done. That’s in front of them, and we don’t want to try to get in front of that trade.”

The S&P 500 plunged 5.3 percent to 805.22. The S&P 500 Financials Index fell 17 percent to below its lowest closing level since March 1995 as concern European banks need more capital also weighed on the group. The Dow average slid 332.13 points to 7,949.09. Both the Dow and S&P 500 retreated to two- month lows.

The S&P 500 is off to its worst start to a year, shattering the biggest rally since World War II, as analysts cut earnings estimates by a record 83 percentage points and companies signal worse to come.

Bloomberg

A paedestrian passes before a share prices board which has news ... 
A paedestrian passes before a share prices board which has news pictures of new US President Barack Obama in Tokyo on January 21. Asian stocks fell Wednesday after a plunge on Wall Street, where financial fears eclipsed hope that US President Barack Obama will move quickly to resuscitate the stricken economy.(AFP/Yoshikazu Tsuno)

The S&P 500 is down 11 percent in the first 12 trading days of 2009, exceeding last year’s 9.2 percent drop, according to data compiled by Bloomberg going back to 1928. The decline helped erase more than two-thirds of a 24 percent rally since Nov. 20 as optimism that government spending would revive the economy evaporated.

‘Effectively Insolvent’

U.S. financial losses from the credit crisis may reach $3.6 trillion, according to New York University Professor Nouriel Roubini, who predicted last year’s economic and stock-market meltdowns.

“If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion,” Roubini said at a conference in Dubai today. “This is a systemic banking crisis.”

Europe’s Dow Jones Stoxx 600 Index retreated 2.1 percent today, led by banks and technology companies. It fell almost 2 percent yesterday after Royal Bank of Scotland Group Plc forecast the biggest-ever loss by a U.K. company. The MSCI Asia Pacific Index retreated 2.1 percent today.

Obama Sworn In

Barack Obama became the 44th U.S. president today, inheriting the most severe economic crisis since Franklin D. Roosevelt was sworn in 76 years ago. The turmoil has dragged the world’s largest economies into recession, caused more than $1 trillion of losses at financial institutions and prompted a sell-off in global stock markets.

Treasuries fell for a second day on speculation Obama will sell record amounts of debt to battle the recession. The dollar strengthened for a second day against the euro.

State Street lost $21.46 to $14.89 for the biggest drop in the S&P 500 and the stock’s steepest tumble since at least 1984. Unrealized losses on fixed-income investments rose to $6.3 billion at Dec. 31 from $3.3 billion at Sept. 30, the company said. Unrealized losses on assets held in conduits increased to $3.6 billion from $2.2 billion.

Bank of New York Mellon Corp., the world’s largest custodian of financial assets, fell 17 percent to $19, its lowest closing price since 1997.

Financials Tumble

Financial companies posted the biggest drop among the S&P 500’s 10 main industry groups as all 81 shares fell.

Wells Fargo, the largest bank on the U.S. West Coast, slid 24 percent to $14.23. Friedman Billings Ramsey Group Inc. analyst Paul Miller lowered his earnings estimates and price target, in addition to predicting a dividend cut.

Bank of America, the biggest U.S. lender by assets, fell the most in the Dow average, sliding 29 percent to $5.10. FBR’s Miller estimated Bank of America needs at least $80 billion of additional capital.

Read the rest from Bloomberg:
http://www.bloomberg.com/apps/news?
pid=20601087&sid=aOYw.awwsNSg&r
efer=worldwide

The Bank of America building in Washington, The bank will receive ... 
The Bank of America building in Washington, The bank will receive 20 billion dollars in fresh capital to help shore it up after acquiring Merrill Lynch, the US Treasury Department announced(AFP/File/Karen Bleier)

Obama must deliver after lofty address

January 21, 2009

Barack Obama proved he could smash America’s ultimate racial barrier and deliver a soaring speech, such as his inaugural address, which both mesmerized and inspired the masses.

But starting Wednesday, history will judge President Obama not for the color barrier he hurdled but for the competency he demonstrates. And those who marveled at the delivery of his oratory will now demand he deliver on his promises.

By Donald Lambro
The Washington Times

Related:
 Obama Inauguration: Unforgettable Moment, Pedestrian Speech (And That’s O.K.)

The task will not be easy in a turbulent world dominated by war and economic collapse, especially for a young president who on Tuesday promised action as far-reaching as harnessing the sun, raising health care’s quality while lowering its costs, and enacting fixes “bold and swift” for an ailing economy many believe will take years to heal.

Mr. Obama acknowledged Tuesday there are those who have doubts about the magnitude of his plans. “There are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans,” he said. “Their memories are short, for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.”

But many of the historical triumphs he cited in his address took decades to secure. His presidency can only last four or eight years.

Ronald Reagan, the last president who left office at the height of his popularity, was considered a successful president because he dealt with two big issues: pulling the country out of a deep recession and fostering the collapse of the Soviet Union.

If Mr. Obama can just fix the economy, put the country back on the road to prosperity and slay trillion-dollar deficits as far as the eye can see, he will go down in history as one of our noteworthy presidents. But he believes — and right now apparently the country does, too — that he can do much more.

The latest Gallup Poll found last week that nearly two-thirds of Americans are confident he will turn out to be a successful president. “Obama is the beneficiary of more goodwill than his recent predecessors, and expectations of him are extraordinarily high,” polling analyst Karlyn Bowman said.

But many Americans remain deeply pessimistic about the economy and their own circumstances. A Zogby Interactive poll released last week says less than 5 percent are feeling positive about the economy and describes only one-third as positive about their own financial situation.

Promises are the mother’s milk of American politics, but it is difficult to remember an incoming president who has made as many as Mr. Obama has over the course of his campaign, including fixing Social Security’s and Medicare’s mounting insolvency, looming like Mount Everest on the political horizon.

After years of an unpopular administration beset by war, recession and natural disaster, Mr. Obama has promised a new era of competence that would grapple with and cure the nation’s most insoluble ills.

He said he would “not only create new jobs,” but lay a new foundation of growth. He would build the roads and bridges, install new electric grids and lay the digital lines that “bind us together.”

He promised to restore science “to its rightful place,” unleash “technology’s wonders,” “harness the sun and the winds and the soil to fuel our cars and run our factories,” “transform our schools and colleges and universities. All this we can do. And all this we will do.”

It was a breathtaking performance of monumental proportions, one he had successfully road-tested across the land. He believes he inherits a country ready for a big-spending revolution to tackle all of the difficulties and that he can tackle them all. Trillion-dollar deficits and the political intractability of Washington will soon test his mettle.

Mr. Reagan assumed office saying that government is the problem, not the solution, and Bill Clinton said the era of big government is over. But Mr. Obama wants to move that debate onto an entirely different plane: competence.

“What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works,” he said.

“Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.”

The electorate will soon begin keeping the official scorecard.

U.S. economy may sputter for years

January 19, 2009
Unemployment could be worse than now by the time President-elect Barack Obama’s first term ends.
By Peter G. Gosselin
Los Angeles Times
January 19, 2009
Reporting from Washington — Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis.

And with good reason: The picture isn’t pretty.

The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come.

The prospects are so gloomy, according to a recent study, that unemployment may be slightly higher by the time President-elect Barack Obama’s first term ends.

The damage done by plunging house and stock prices, the failure of other major economies to be independent sources of growth and hidden weaknesses in America’s past performance have crippled nearly every actor in the nation’s economic drama.

None — save perhaps the government — retains the power to push the economy back to speeds it regularly achieved during much of the last generation, economists say.

The result: An economy that once averaged 3% or better annual growth would be lucky to grow 2% a year during the entirety of the new president’s term.

“That is going to feel like stagnation” to most people, said John Lonski, chief economist at Moody’s Investors Service.

“We’re in a post-bubble global recession, and post-bubble recessions are lethal for growth,” Stephen S. Roach, chairman of Morgan Stanley Asia, said from Beijing. “It will be a long time before the world experiences anything more than anemic recovery.”

Obama and his economic aides seem to understand the painful prospects they face.

Read the rest:
http://www.latimes.com/business/la-
fi-econ19-2009jan19,0,1021931.story