Tuesday, September 15, 2009

US Economy Faces Big Test Next Month

"The economy remains weak and will face a big test next month when the government starts winding down its massive support programs, banking analyst Meredith Whitney told CNBC.

"There's not a lot of new job creation going on on Main Street—and the liquidity to the consumer and small business is still contracting," she said. "And it's very difficult to get the engine moving without a lot of government support within that. So when you slowly wean government supports, that's going to be the test that I think everyone's going to be watching starting in October."

Though economists generally believe the US is pulling out of a recession, unemployment remains high and most economic indicators are still showing only modest improvement.

"Where do the jobs come from?" she said. "Surely if this country becomes massively protectionist we'll build up manufacturing capability. Is that necessarily a good thing? No. There's not a lot of free capital for small business innovation—small business, period—and that's half the workforce."

Source CNBC

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