http://online.wsj.com/article/SB123671107124286261.html
By PHIL IZZO
U.S. President Barack Obama and Treasury Secretary Timothy Geithner
received failing grades for their efforts to revive the economy from
participants in the latest Wall Street Journal forecasting survey.
The economists' assessment stands in stark contrast with Mr. Obama's
popularity with the public, with a recent Wall Street Journal/NBC poll
giving him a 60% approval rating. A majority of the 49 economists
polled said they were dissatisfied with the administration's economic
policies.
On average, they gave the president a grade of 59 out of 100, and
although there was a broad range of marks, 42% of respondents rated
Mr. Obama below 60. Mr. Geithner received an average grade of 51.
Federal Reserve Chairman Ben Bernanke scored better, with an average
71.
[forecast]
Charts and Full Results
* See forecasts for growth, unemployment, housing and more. Plus,
views on the auto industry, ranking Fed chairmen, grading policymakers
and more. Survey conducted March 6-10. (Or download all data as .xls)
* Real Time Econ: Economic news and analysis
* Complete Coverage: Forecasting Survey
* How would you grade Timothy Geithner? Join the discussion at
Journal Community.
The economists, many of whom have been continually surprised by the
depth of the downturn, also pushed back yet again their forecasts for
when a recovery would begin. On average, they expect the downturn to
end in October. Last month, they said the bottom would arrive in
August. They estimate that U.S. gross domestic product will continue
to contract in the first half of this year, with slow growth returning
in the third quarter.
Economists were divided over whether the $787 billion
economic-stimulus package passed last month is enough. Some 43% said
the U.S. will need another stimulus package on the order of nearly
$500 billion. Others were skeptical of the need for stimulus at all.
However, economists' main criticism of the Obama team centered on
delays in enacting key parts of plans to rescue banks. "They
overpromised and underdelivered," said Stephen Stanley of RBS
Greenwich Capital. "Secretary Geithner scheduled a big speech and came
out with just a vague blueprint. The uncertainty is hanging over
everyone's head."
Mr. Geithner unveiled the Obama administration's plans Feb. 10, but he
offered few details, and stocks sank on the news. The Dow Jones
Industrial Average is down almost 20% since the announcement, as
multiple issues have weighed on investors' confidence. The Treasury
secretary has since appeared before Congress and offered more
specifics but has said action on key parts of the plan still is weeks
away.
About the Survey
The Wall Street Journal surveys a group of 54 economists throughout
the year. Broad surveys on more than 10 major economic indicators are
conducted every month. Once a year, economists are ranked on how well
their forecasts have fared. For prior installments of the surveys,
see: WSJ.com/Economist.
"We have taken an unprecedented level of action toward economic
recovery, accomplishing in weeks what took other countries years to
do," Treasury spokesman Isaac Baker said. "While Wall Street and
investors were disappointed when they didn't get a sweeping bank
bailout, we've laid out a plan to stabilize the financial system while
protecting the taxpayer and ensuring government funds are spent
wisely. This crisis was years in the making, and it will take time to
solve."
Treasury has started implementing a housing-recovery plan, moved
forward on a joint program with the Fed to boost consumer lending, and
has begun stress-testing banks in an effort to determine which
institutions will need additional capital from the government. The
results of the stress tests won't be known for a few weeks. Meanwhile,
a key part of the plan -- a public-private partnership to take toxic
assets off bank balance sheets -- remains in the planning stages.
The economists' negative ratings mark a turnaround in opinion. In
December, before Mr. Obama took office, three-quarters of respondents
said the incoming administration's economic team was better than the
departing Bush team. However, Mr. Geithner's latest marks are lower
than the average grade of 57 that former Treasury Secretary Henry
Paulson received in January.
Mr. Geithner, who is relying on a skeleton crew of advisers in the
Treasury Department as the administration struggles to make key
appointments to his staff, is encountering the same problems as his
predecessor in dealing with the complexities of a bailout plan.
Richard DeKaser of Woodley Park Research, who gave high marks to
Messrs. Obama and Geithner, admitted disappointment in the delay in
action but said he appreciated the magnitude of the task. "I don't
know what's holding it up," he said. "But I'm assuming it's not just
because they're hitting the golf course."
There was widespread initial support for the appointment of Mr.
Geithner, who as president of the New York Federal Reserve had been on
the front lines of the crisis since it erupted. However, in the
ensuing weeks Mr. Geithner has had to deal with tax troubles and
criticism from those opposed to any bailouts as well as those who
think the government needs to be doing more.
Meanwhile, the economists surveyed this month predict that the economy
will shed another 2.8 million jobs over the next 12 months as the
unemployment rate climbs to 9.3% by December, up from the 8.1% rate
recorded in February. Economists also see nearly a one-in-six chance
that the U.S. will fall into a depression, defined as a decline in
per-person GDP or consumption by 10% or more.
"We just keep moving the date [when the recession will end] out,
hoping at some point in time we will be able to move the date back
in," said Diane Swonk of Mesirow Financial.
The economists didn't just single out the U.S. for criticism; 70% of
participants said the response of governments around the world to the
global recession has been inadequate. "The Europeans or Japanese don't
seem to be doing near enough to kickstart their economies," said
Nariman Behravesh of IHS Global Insight. "It could be we've done all
the right things, but the rest of the world goes down the tubes."
Despite the growing criticism elsewhere, the respondents were broadly
supportive of the Fed. More than 85% of the economists agreed that the
central bank's proliferating lending programs are well-designed,
well-executed and helping the economy. And while grades for Mr.
Bernanke remain off of their 2007 highs, the average has stabilized
after falling as low as 69 in the November survey.
Amid all the gloom, there is a bright spot: Four-fifths of the
economists said now is a good time to buy equities, especially if the
investor has a long-term view.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~|
Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to
date
Get the Free Trial
http://ad.doubleclick.net/clk;207172674;29440083;f
Archive:
http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:291433
Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm
Unsubscribe:
http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
