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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Romer: Let Stimulus Do Its Work

UPDATED

Christina Romer, chairwoman of President Obama's council of economic advisers, said the stimulus spending just approved must be monitored to see how it's working before a second package is approved, The Post's Jason Ukman reports.

Romer is speaking right now at the Brookings Institution.

The money is just starting to flow, Romer said.

"We need to let this medicine work for awhile," she said.

At same time, Romer said earlier that ending government stimulus too quickly is a danger.

"Beware of cutting back...too soon" on monetary and fiscal stimulus, she said.

"We will need to monitor the economy closely to be sure that the private sector is back in the saddle before the government takes away its crucial lifeline," she said.

Romer: Stimulus Will Inspire Confidence

1:46 P.M.: Romer called the stimulus package "the biggest and boldest counter-cyclical fiscal action in history."

Romer delivered a bit of a history lesson, diving into the effects of FDR's New Deal policies.

"While the direct effects of fiscal stimulus were small in the Great Depression, I think it is important to acknowledge that there may have been an indirect effect," she said.

She added: "Roosevelt's very act of doing something must have come as a great relief to a country that had been suffering depression for more than three years. To have a president step up to the challenge and say the country would attack the Depression with the same fervor and strength it would an invading army surely lessened uncertainty and calmed fears.

Also, signature programs such as the [Works Progress Administration] that directly hired millions of workers no doubt contributed to a sense of progress and control. In this way, Roosevelt's actions may have been more beneficial than the usual estimates fiscal policy suggest.

If the actions President Obama is taking in the current downturn can generate the same kind of confidence effects, they may also be more effective than estimates based on conventional multipliers would lead one to believe," Romer said.

-- Frank Ahrens
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By Frank Ahrens  |  March 9, 2009; 2:42 PM ET
Categories:  The Ticker  | Tags: Christina Romer, Obama  
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