OECD report contains encouraging news on economy

Supported by substantial stimulus measures, the U.S. economy has started to grow again after one of the most severe economic crises it has faced since the Great Depression, according to the OECD’s latest U.S. economic survey.

After shrinking through the first half of 2009, U.S. GDP began to increase again and is now projected to be 2.6 percent higher in 2010 than the year before. Employment has also started to rise, although the unemployment rate is likely to stay above the pre-crisis level for an extended period and long-term unemployment remains a concern.

“It is becoming increasingly clear that the economy has entered a soft patch, but this is not inconsistent with previous recoveries,” said OECD Secretary-General Angel Gurría.

“We don’t see a risk of a double-dip recession,” he added. “That said, we don’t see either a recovery that is strong enough to put a significant dent in unemployment.”

He stated that support from monetary and fiscal policy is still necessary and welcomed the announcement from Federal Reserve Chairman Ben Bernanke to provide additional stimulus if needed.

Gurría also welcomed the extension of unemployment benefits, job training and tax credits for hiring workers, and the Administration’s target of reducing the deficit to 3 percent of GDP by 2015.

The establishment of the bipartisan National Commission on Fiscal Responsibility and Reform by President Obama with a mandate to propose additional measures to achieve fiscal consolidation also goes in the right direction.

“Even if measures are to be implemented only at a later stage, spelling them out now is an important signal,” said Gurria.

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