US unemployment rate may top 10%

WASHINGTON (AP) — Former Federal Reserve Chairman Alan Greenspan predicted on Sunday that the jobless rate will pass 10 percent and stay there for a while, and a second stimulus plan is not needed now.

He spoke favorably of extending unemployment benefits and tax credits for health insurance, options the Obama administration is considering for helping people laid off during the recession. With more than 15 million people out of work, unemployment reached 9.8 percent in September, the highest rate in 26 years.

“This is an extraordinary period and temporary actions must be taken, especially to assuage the angst of a very substantial part of our population,” Greenspan said on ABC television’s “This Week.”

“I don’t actually consider those types of actions stimulus programs. I think that they are essentially programs which support people - essentially their living standards in part. I grant you it has a stimulus effect, but that would be my primary focus,” he said.

Calling the jobs report released Friday “pretty awful,” Greenspan said he is particularly concerned with statistics showing the number of people out of work for six months or more has reached 5 million after going up sharply last month.

“People who are out of work for very protracted periods of time lose their skills eventually,” he said. “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 that are involved there, there is a real and, in one sense, an irretrievable loss.”

Looking ahead on the unemployment picture, he said his “own suspicion is that we’re going to penetrate the 10-percent barrier and stay there for a while before we start down.”

The former Fed chief said he would recommend that President Barack Obama focus on trying to get the economy going but without doing so much that the government’s actions are counterproductive. With growth for the third quarter appearing to reach or surpass three percent, Greenspan said he would not propose a second stimulus package.

“In my judgment it’s far better to wait and see how this momentum that has already begun to develop in the economy carries forward,” he said.

Greenspan again expressed his concern over the growing size of the federal deficit and the federal debt.