Greenspan says unemployment will top 10 percent

In the October 4, 2009 article "Greenspan says unemployment will top 10 percent," Associated Press writer Douglass K. Daniel reports that the former chairman of the Federal Reserve System's Board of Governors thinks unemployment is headed higher:

WASHINGTON – Former Federal Reserve Chairman Alan Greenspan predicted on Sunday that the jobless rate will pass 10 percent and stay there for a while, and a second stimulus plan is not needed now.

He spoke favorably of extending unemployment benefits and tax credits for health insurance, options the Obama administration is considering for helping people laid off during the recession. With more than 15 million people out of work, unemployment reached 9.8 percent in September, the highest rate in 26 years.

"This is an extraordinary period and temporary actions must be taken, especially to assuage the angst of a very substantial part of our population," Greenspan said on ABC's "This Week."

"I don't actually consider those types of actions stimulus programs. I think that they are essentially programs which support people — essentially their living standards in part. I grant you it has a stimulus effect, but that would be my primary focus," he said.

Calling the jobs report released Friday "pretty awful," Greenspan said he is particularly concerned with statistics showing the number of people out of work for six months or more has reached 5 million after going up sharply last month.

"People who are out of work for very protracted periods of time lose their skills eventually," he said. "What makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and, in one sense, an irretrievable loss."

Looking ahead on the unemployment picture, he said his "own suspicion is that we're going to penetrate the 10 percent barrier and stay there for a while before we start down."

The former Fed chief said he would recommend that President Barack Obama focus on trying to get the economy going but without doing so much that the government's action are counterproductive. With growth for the third quarter appearing to reach or surpass 3 percent, Greenspan said he would not propose a second stimulus package.

"In my judgment it's far better to wait and see how this momentum that has already begun to develop in the economy carries forward," he said.

Greenspan against expressed his concern over the growing size of the federal deficit and the federal debt.

Sen. Evan Bayh, who's on the Senate Banking, Housing and Urban Affairs Committee, said he, too, is waiting for the remainder of the job-related stimulus initiatives to take effect.

"If I'd been drafting the package, I would have tried to have it go into effect sooner and have more of it directly related to jobs," Bayh, D-Ind., said on "Fox News Sunday." "But it is what it is at this point. It continues to go into the economic bloodstream and to keep things, which, as unsatisfying as they are, from being a whole lot worse."

Sen. Barbara Boxer, D-Calif., said an energy bill promoted by Democrats could serve as a jobs stimulus because it focuses on using venture capital to fund "clean energy" jobs.

But Sen. Jon Kyl, R-Ariz., said Democrats would best help the economy by supporting targeted tax relief and dropping "job killers" such as the proposed cap-and-trade approach to climate change and a health care bill that he said would raise taxes on small businesses.

Boxer and Kyl appeared on CNN's "State of the Union."