U.S. Not Out Of The Woods Yet, Says Economist

By Benny Martinez - University of New Mexico/Talk Radio News Service

In his State of the Union address on Wednesday, President Barack Obama said, “The worst of the storm has passed.” But according to Chief Economist of Moody’s Corporation Mark Zandi, the country remains at high risk of revisiting a recessionary period.

Evidence of a 5.7 percent increase in the nation’s Gross Domestic Product (GDP) proves that the “Great Recession” is over, Zandi said on Friday. He applauded and credited policy initiatives produced by Federal Reserve Chariman Ben Bernanke.

According to Zandi, the President’s 2009 stimulus package pumped billions of dollars into the economy and is partly responsible for its recent growth. It is evident now, however, that the stimulus package will eventually become an opposing force against efforts to expand the efficiency of the economy, Zandi said.

Although signs of economic expansion are evident, Zandi admitted that the country is still susceptible to falling back into a recession.

“The recovery is fragile,” Zandi said. “I don’t think that the coast is clear, I don’t think there is any guarantee that the recovery is going to evolve into a self-sustaining economic expansion...there are high odds [indicating] that it won’t.”

Zandi blamed the high-risk situation on the nation's ten percent unemployment rate for the U.S., saying that without net job creation, the country will not have the income growth to support consumer spending. He said that small business expansion will serve as the backbone for this effort and applauded the President for initiating tax breaks for those businesses.