House Speaker Nancy Pelosi (D-CA) urged President George W. Bush to support a second economic stimulus Wednesday, citing the latest batch of negative economic data.
"The latest economic news makes clear that President Bush and Senate Republicans must drop their opposition to the House-passed economic recovery legislation that would provide a down payment on creating jobs, helping states avoid deep cuts to health care and essential services, and deliver emergency nutrition assistance to struggling families," Pelosi said in a statement.
President-elect Barack Obama has also called for a second economic stimulus, calling on Congress to work on an "aggressive economic recovery plan."
In a press conference Monday, Obama declined to offer any figures to outline the scope of his plans for the economic recovery package, but he said it would have to be large enough to "jolt" the economy back on track.
"I want to see it enacted right away," Obama said. "I don't want to get into numbers right now. Part of the task of this economic team behind me is to help to shape the details of that, in consultation with Congress, the Federal Reserve and businesses and thinkers across the country."
He added, "We need a big stimulus package that will jolt the economy back into shape and that is focused on the 2.5 million jobs that I intend to create during the first part of my administration."
In her statement, Pelosi pledged, "Congress will continue to work with President-elect Obama on bold economic recovery and job creation legislation that will cut taxes, invest in a cleaner energy future, and rebuild schools, roads and bridges."
It is precisely that kind of investing that Moody's Economy.com chief economist Mark Zandi urged Congress to approve in a hearing before the Senate Budget Committee last week.
"Without fiscal stimulus, the recession will last throughout 2009 and much of 2010," Zandi said. "It's not in the league of the Great Depression, but it's certainly the most severe we've seen since that dark time."
Without such a stimulus, unemployment could soar to 10 percent by the end of 2010, Zandi warned, up from its current level of 6.5 percent. He proposed a $400 billion stimulus package that would aid suffering state and local governments, improve infrastructure, and extend jobless benefits and programs, like food stamps, to help workers facing layoffs as GDP declines.
Zandi's scenario was evidenced Wednesday, when a Commerce Department report showed that new home sales fell by more than expected in month of October, falling to their lowest level in well over seventeen years.
In addition, although number of people filing for first-time unemployment benefits edged lower last week, 529,000 people still filed for jobless claims.
While the number is off its recent 16-year high, the moderation is likely to do little to calm fears about the economy. Recent statistics have shown a weakening economic situation, with the labor market being one of the biggest causes of worry.
A report issued Tuesday showed a 0.5 percent decline in third-quarter Gross Domestic Product, a measure of broad economic performance. This compared to the 0.3 percent decline that was originally reported.
For the fourth quarter, which will end in December, economists are already suggesting that GDP will decline by more than 4 percent.
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