Former Federal Reserve chairman Paul Volcker warned on Thursday that the US faces a “considerable slog” in recovering from a deep recession and that any economic gains would be too mild for a while to make a big dent in stubbornly high unemployment rates.
Speaking to a group of Kentucky corporate and government leaders, Volcker said more manufacturing and exports are among the needed prescriptions, not additional consumer spending, to heal the steepest economic downturn since the Great Depression.
“It took years to get into the situation we’re in. It’s going to take some years to get out of it,” Volcker said at an afternoon-long economic round-table meeting in central Kentucky.
Volcker bemoaned some economic trends leading up to the downturn — a US savings rate that “practically disappeared” and a financial industry that became adept “at turning lousy credit into good credit, or that’s the way it appeared.”
“I think we have a considerable slog to get through,” he said.
Volcker, who served as Fed chairman from 1979 to 1987, said the nation’s unemployment rate could continue to rise in the near term.
The unemployment rate rose to a 26-year high of 9.8 percent last month and is expected to increase well into next year. Initial claims for state jobless insurance increased 11,000 to 531,000 last week, the Labor Department said on Thursday.
Meanwhile, the Conference Board said its index of leading economic indicators rose 1 percent to 103.5, the highest since October 2007, but optimism over the robust increase was tempered by a report showing that home prices fell 0.3 percent in August.
“The recovery will be pretty slow, too slow to reduce the unemployment rate very fast,” Volcker said.
White House economic adviser Lawrence Summers said in an interview on Wednesday the economy was set for a recovery, but cautioned that the pace of growth might be moderate and the job market would not revive immediately.
Boston Federal Reserve Bank President Eric Rosengren said the economy would grow reasonably in the second half of this year, but added that the Fed needed to see more progress before taking some of its economic support away.
Volcker, now a White House economic adviser, also said the Obama administration’s proposed overhaul of financial rules could turn into a tougher fight in Congress than the struggle to revamp the nation’s healthcare system.
Without going into specifics, Volcker said the administration would like to pass the financial rules bill this year, but said: “I think it’s more important to get it right than to meet a particular deadline.”
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
‘FORM OF PROTEST’: The German Institute Taipei said it was ‘shocked’ to see Nazi symbolism used in connection with political aims as it condemned the incident Sung Chien-liang (宋建樑), who led efforts to recall Democratic Progressive Party (DPP) Legislator Lee Kun-cheng (李坤城), was released on bail of NT$80,000 yesterday amid an outcry over a Nazi armband he wore to questioning the night before. Sung arrived at the New Taipei City District Prosecutors’ Office for questioning in a recall petition forgery case on Tuesday night wearing a red armband bearing a swastika, carrying a copy of Adolf Hitler’s Mein Kampf and giving a Nazi salute. Sung left the building at 1:15am without the armband and apparently covering the book with a coat. This is a serious international scandal and Chinese
COUNTERINTELLIGENCE TRAINING: The ministry said 87.5 percent of the apprehended Chinese agents were reported by service members they tried to lure into becoming spies Taiwanese organized crime, illegal money lenders, temples and civic groups are complicit in Beijing’s infiltration of the armed forces, the Ministry of National Defense (MND) said in a report yesterday. Retired service members who had been turned to Beijing’s cause mainly relied on those channels to infiltrate the Taiwanese military, according to the report to be submitted to lawmakers ahead of tomorrow’s hearing on Chinese espionage in the military. Chinese intelligence typically used blackmail, Internet-based communications, bribery or debts to loan sharks to leverage active service personnel to do its bidding, it said. China’s main goals are to collect intelligence, and develop a
RSS