By Vincent Del Giudice and Thomas R. Keene March 10 (Bloomberg) — The U.S. faces an extended recovery from the recession even after the government infusion of cash into stimulus programs and the banking system, said Andrew Michael Spence , a Nobel laureate in economics. “Right now the expectations are that somehow the government can magically restore the economy to balance,” Spence said in an interview today on Bloomberg Radio. “A more realistic view is it’s going to take several years.” Federal Reserve Chairman Ben S. Bernanke said last month the economy is in a “nascent” recovery that still requires low interest rates to encourage demand by consumers and businesses once federal stimulus fades. Economists surveyed by Bloomberg News predict growth of 3 percent this year and next following a 2.4 percent contraction in 2009, which was the worst performance for a single year since 1946. “Diminished consumption” in the U.S. will be a drag on world growth, Spence said. “It’s very hard to progress on some global issues without a very strong America,” he said. The U.S. government should focus on support for the unemployed “over a more extended period” to bolster consumer confidence and spending, he said. Spence is joining the faculty of New York University Stern School of Business effective Sept. 1 after teaching at Stanford University in California. He shared the Nobel Memorial Prize for Economics in 2001 with George Akerlof of the University of California, Berkeley, and Joseph Stiglitz of Columbia University in New York, for their “analyses of markets with asymmetric information,” according to the Nobel Foundation. The U.S. economy has lost 8.4 million jobs since the recession started in December 2007, and the unemployment rate reached a 26-year high of 10.1 percent in October. The rate was down to 9.7 percent in February. (In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.) To contact the reporters on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net ; Thomas R. Keene in New York tkeene@bloomberg.net .
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Nobel Laureate Spence Says U.S. Economic Recovery to Take `Several Years’
