Top Economists See Recovery Very Differently

Several economic experts offered Newsweek their opinions about the state of the economy. Here are four of their viewpoints in a nutshell:

1. Allan Meltz, professor at Carnegie Mellon’s Tepper School of Business and a historian of the Federal Reserve: “The economy would benefit if the government offered a tax credit to anyone who buys an existing house in the next two years — a broader program than the one they’ve passed, which offers a credit only to first-time homebuyers this year.”

2. Larry Lindsey, CEO of the Lindsey Group and former governor of the Federal Reserve: “Private-sector job creation will be sluggish. Prices in the government-subsidized and -controlled sectors of the economy, like education and health care, will continue rising. Meanwhile, both real wages and profit margins in the private economy will be shrinking. This means that the near-term spate of good economic news is probably just a false dawn.”

3. Jeremy J. Siegel, professor of finance at the Wharton School of the University of Pennsylvania: “There are definitely reasons for optimism. Mortgage rates have come down to near-record-low levels. Furthermore, some of the data on economic activity has recently begun to stabilize, such as retail sales, consumer sentiment and housing. While none of these variables is remotely ‘robust,’ they are no longer spiraling downward as they had over the past six months.”

4. Bill George, professor, Harvard Business School, and former chair and CEO of Medtronic: “The economy is going to get worse before it gets better, so optimists shouldn’t play up stabilization until the economy finds its bottom. There are many layoffs ahead that will swell the unemployment rolls. Eventually, the massive amounts of money the government is pumping into the economy will take hold and the economy will gradually begin to turn upward again, but this won’t happen until the end of 2009 at the earliest.”

Source: Newsweek