White House economic adviser Christina Romer said on Thursday that the $787-billion U.S. stimulus program was stabilizing the economy despite unacceptably high job losses.
Romer, chairman of the Council of Economic Advisers, delivered a lengthy defense of the Obama administration's stimulus program before the Economic Club of Washington, saying the spending impact will grow over time.
But she acknowledged that a report on July unemployment, to be issued by the Labor Department on Friday, was likely to show the economy continued to shed hundreds of thousands of jobs.
It is unacceptable, Romer said, but cautioned: Unfortunately, even once GDP (gross domestic product) begins to grow, it will likely take still longer for employment to stop falling and begin to rise.
Romer said that since the stimulus program was started, an economy that was in freefall has stabilized substantially, and now looks as though it could begin to recover in the second half of the year.
She said that the impact of stimulus spending should increase in coming quarters, aiding a recovery. We expect the fiscal stimulus to be roughly $100 billion in each of the next five quarters, Romer said.
Nonetheless, recovery is likely to be a long, hard process because it will take some time to get the unemployment rate down to normal levels, she said.
The bottom line is that we are no doubt in for more turbulent times, Romer said.