Unemployment rates will be high in 2010 and only the Federal Reserve has the power to create enough jobs to really pull the economy out of the recession, says Nobel-winning economist Paul Krugman.
Since the recession began, about 100,000 jobs have been lost a month but to bring about true recovery, 300,000 jobs need to be created a month, says Krugman.
Politics could prevent the administration from producing a second stimulus package needed to create jobs, but the Fed can buy another $2 trillion in assets and get the economy going again with little downside, Krugman wrote in his column in the New York Times.
The Federal Reserve snapped up assets in wake of the Lehman collapse and has attempted to make credit cheap, although monetary authorities seem to feel they have done enough.
“Ideological opponents of government activism tend to be as critical of the Fed’s credit expansion as they are of the Obama administration’s fiscal stimulus,” Krugman writes.
“And this has probably made the Fed reluctant to use its powers to their fullest extent.”
President Barack Obama has turned his attention to job creation now that the country has emerged from its recession.
While the economy may be improving, job creation is lagging and threatens to dampen the country's recovery.
“My hope is that as we move forward, we can do so together,” Obama said after meeting with Congressional Democrats and Republicans, according to Reuters.
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