Keith Hennessey: No need for a second economic stimulus package this year.
It is probably not the easiest time to be assistant to the president for economic policy.
On the day Keith Hennessey came to breakfast with reporters, a four-column, front-page headline in the Wall Street Journal shouted "Dollar's Dive Deepens as Oil Soars." Earlier in the week, financial pages focused on an accelerating decline in home prices.
Mr. Hennessey, who coordinates White House economic-policy development as director of the National Economic Council, predicted tepid economic growth for the first three months of 2008. He said his "best guess" is that the first quarter of 2008 "will look a lot like" the fourth quarter of 2007. On Feb. 28, the government issued a revised estimate for economic growth in the final three months of 2007, leaving it unchanged at a weak 0.6 percent annual rate.
Federal Reserve interest-rate cuts and congressional passage of a stimulus package that the president recommended, "is going to bump [gross domestic product] a bit in the second quarter and fairly significantly in the third quarter [of 2008]," Hennessey said. "The numbers I have seen are adding something like a point to GDP in the third quarter."
At the Monitor-sponsored session with reporters, Hennessey argued against having Congress pass a second economic stimulus package this year. "The action that was taken was a wise action, give it time to work. We do not anticipate the need at this point in time for additional stimulative policy from the Congress and I don't anticipate a new proposal coming in that regard."