Experts: Economy needs time

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By PAUL WISEMAN AP Economics Writer

WASHINGTON — The best cure for the economy now is time.
That’s the overwhelming opinion of leading economists in a new Associated Press survey. They say the Federal Reserve shouldn’t bother trying to stimulate the economy — and could actually do damage if it did.
The economists are lowering their forecasts for job creation and economic growth for the rest of this year, mainly because of high oil prices.
The economists now expect the nation to create 1.9 million jobs this year, about 200,000 fewer than when they were last surveyed eight weeks ago. They expect the unemployment rate, now 9.1 percent, to be 8.7 percent at year’s end. Before, they expected 8.4 percent.
Despite their gloomier outlook, 36 of the 38 economists surveyed oppose any further efforts by the Fed to invigorate growth. The Fed has already cut short-term interest rates to near zero. And it’s ending a program to buy $600 billion in Treasury bonds to keep longer-term rates low to help spur spending and hiring.
The economists say another round of bond-buying wouldn’t provide much benefit, if any. And some fear it could make things worse by unleashing high inflation and disrupting financial markets.
What the economy needs most, says John Silvia, chief economist at Wells Fargo, is time. Consumers must further shrink huge debts amassed in the mid-2000s. And the depressed housing market needs time to recover from a collapse in prices and sales.