Former Fed Chief: US Employment Picture 'Awful'

Former Federal Reserve Chairman Alan Greenspan has expressed dismay over rising unemployment in the United States, but reiterated that he believes a recovery is underway from the longest and deepest economic recession of the post-World War II era.

America's best-known economist, former U.S. central bank chief Alan Greenspan was blunt in assessing Friday's report from the Labor Department, which boosted the U.S. unemployment rate to 9.8 percent, with more than a quarter-million jobs lost in September. "The job report was pretty awful, not matter how you look at it," he said.

Greenspan was speaking on ABC's "This Week" television program.

He predicted unemployment will exceed 10 percent in coming months. Greenspan noted that not only are job losses continuing, but the number of Americans out of work for six months or longer has also risen sharply. He said prolonged unemployment imposes great hardship on families, while having large numbers of idle workers imposes a cost on the economy as a whole. "The economy loses skills. Remember that what makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills, it is an irretrievable loss," he said.

Nevertheless, Greenspan added his voice to a growing chorus of economists saying the recession that began in late 2007 has likely ended. The former Fed chief said he believes the United States will register an economic growth rate of three percent or more during the current October-though-December quarter.

Disappointing labor numbers come more than half a year after President Barack Obama signed a massive, $787-billion federal economic-stimulus package into law.

Also appearing on ABC was Republican Senator John Cornyn of Texas. "The stimulus so far has been unsuccessful in achieving the goals that the president set out for it. He said that with the stimulus we would see no higher than eight percent unemployment," he said.

Democratic Senator Charles Schumer of New York disagreed. "Before the stimulus we were losing 700,000-to-800,000 jobs a month, a huge amount. It is going down," he said.

Schumer said Congress is likely to extend unemployment benefits, as well as a program that helps jobless workers retain health insurance.

As Washington considers additional ways to promote economic growth, Alan Greenspan had words of caution. "In trying to do too much, you can actually be counterproductive. In my judgment it is far better to wait and see how this momentum that has already begun to develop in the economy carries forward," he said.

As he has often done in the past, the former Fed chief expressed unease over America's growing national debt, which he said will ultimately affect interest rates and the nation's economic growth potential.