Ken Rogoff, former chief economist of the IMF, says the U.S. will need another fiscal stimulus package.
That’s because economic recovery will be a slow grind, Rogoff, now a Harvard professor, tells Bloomberg TV.
“We definitely seem to be hitting a plateau” in the economy, he says.
“But that doesn’t mean we’re going to bounce up in the next couple years. In fact, I rather doubt it. So we’ll be in this long period, maybe two years of vulnerability.”
Rogoff points out that “this is an unprecedented downturn. ... It’s not like there’s galloping growth. … Housing I don’t think we’ll see come back strongly for a really long time.”
Confusion arises because “this was such a deep recession,” Rogoff says.
“It’s got so many unusual characteristics, that can we really expect a normal recovery?”
Rogoff’s prediction: “We’re going to have a very slow recovery from here… We’re talking about years.”
“I do think they’re going to need another fiscal stimulus. I think we’re going to get to the point where recovery just isn’t soaring, and they’re going to do the same thing again.”
But Rogoff warns against too much government intervention.
“There’s a tradeoff in the long run,” if the government takes over too much of the economy.
Magazine publisher Steve Forbes is even more worried.
“We should know by now that stimulus packages don’t work,” he tells CNBC. “It doesn’t change tax rates.”
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