Billionaire Wilbur Ross argues that the US now needs a second government stimulus because the first one wasn't enough to jump-start the U.S. consumer.
"I think it's really going to be that we're going to continue the massive transfer of liabilities from the private sector to the public sector,” Ross, who runs investment fund WL Ross & Co., told CNBC.
“That's really what's been going on.”
“I think it's the only way to de-leverage the American consumer. The fact is that the consumer is more over-leveraged now than at the peak of the boom."
Combine that with rising unemployment and you have a “very soggy topline” for the economy, Ross says.
Ross says he expects the Obama administration will issue another stimulus before next year’s summer Congressional recess because doing so would boost Democratic stock in the 2010 elections.
According to The New York Times, the American economy performed better than expected during the second quarter, contracting at its slowest pace in a year and appearing to get a lift from the government’s $787 billion stimulus package.
“I think it sets the stage for a stronger rebound in the third quarter,” Mark Vitner, a senior economist at Wells Fargo told the newspaper.
“The stimulus program may be flowing through a little bit quicker than people had thought. State and local governments were so hard-pressed, and when the stimulus package passed it provided some immediate relief.”
Unemployment will top 9.8 percent, according to the latest Labor Department figures.
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