The economic recovery hasn’t begun yet, says Harvard economist Martin Feldstein, bucking conventional wisdom.
“The recession isn’t over,” he told Bloomberg. “It will be a while before we have enough information to know if the recession ended.”
The former chairman of President Reagan’s Council of Economic Advisers is a member of the National Bureau of Economic Research’s Business Cycle Dating Committee, which officially determines when recessions begin and end.
The recession officially began in December 2007.
Sluggish consumer spending is restraining the economy, Feldstein says. “2010 is going to be a very weak year. Thrift in the long run is a very good thing, but increasing thrift as you come out of a recession is going to be a drag.”
Residential real estate also will continue to slump, thanks to the failure of the Obama administration’s plan to boost the housing market, Feldstein says.
“It was just not well enough designed. They ended up failing.” As a result, home prices will continue to fall, he says.
“We saw a little pause in home-price declines in the summer, but I think that was because of the first-time home buyers program.”
Abby Joseph Cohen of Goldman Sachs also is bearish on the economy.
“Under normal post-recession conditions, we would be expecting GDP growth of 3 to 3.5 percent in 2010,” she told CNBC. “But we have trimmed that number down to 2.5 percent because of continued concern about labor markets and household balance sheets.”
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