CHICAGO – Top White House economic aide Lawrence Lindsey said Monday that he expected consistent U.S. economic growth to return next year, but he declined say exactly when.
"I think we're going to return to sustained economic growth next year," Lindsey told reporters after a round-table discussion with consumers, workers, small business owners and chief executive officers.
When asked if he saw any emerging signs of hope for the shell-shocked economy, which logged a contraction in the third quarter, Lindsey said: "I think housing is holding up, but we have to get investment going again."
Speaking at the same round-table discussion, White House economic adviser Glenn Hubbard did not predict a big jump in U.S. mortgage rates.
The advisers, as well as Commerce Secretary Don Evans, admonished Americans to shop during the holiday season, saying U.S. economic fundamentals were solid and that the best way to help the economy was to participate in it.
"The U.S. economy is as strong as it was before Sept. 11," Evans said, adding that consumers must have confidence during the holiday shopping season. "It was great before Sept. 11, and it's great today. There's not anything that should slow this system down. We need to get back to the way we were before Sept. 11."
The U.S. economy, already in the throes of a slowdown before the Sept. 11 attacks on the World Trade Center and the Pentagon, suffered another blow as economic activity fell off markedly in the aftermath of the attacks. Unemployment also rose and consumer confidence weakened.
"The economy is as strong as it's ever been," Evans said. "Every dream you had before Sept. 11 is still there. If you were going to buy a car before Sept. 11, go buy a car."
Hubbard acknowledged that the attacks hit household confidence. But he said he believed a stimulus package making scant progress through Congress should help matters.
"I think consumer spending should recover," said Hubbard, who heads the White House Council of Economic Advisors.
He said that in a typical recession, consumers' income falls and spending weakens alongside that. But in this case, it is confidence that has diminished, not income, he said.
Lindsey also said U.S. economic fundamentals did not indicate a sudden rise in long-term market interest rates.
"If you look at the fundamentals, I don't see any reason why you would expect a sudden jump in interest rates," he said in response to a question about the recent huge rise in long-term U.S. bond yields.
Yields on U.S. Treasury bonds have surged over the past week as investors have felt less compelled to cling to the safety of U.S. government debt and sought the higher yields offered by riskier corporate bonds and equities. They are betting the economy has bottomed and that political uncertainty has receded after victories in the U.S.-led war against the Taliban in Afghanistan.