Peter Orszag: The U.S. economy almost ceased to fall

The U.S. economic almost ceased to demonstrate free fall and goes to recovery, said managing director of the White House on the budget, Peter Orszag.

He noted, that once the economy starts to recover, the national budget deficit will shrink quickly, transmits Associated Press.

According to P. Orszag, economic indicators for April showed that the most difficult phase of the crisis has passed. The head of the budget office noted, that reducing the budget deficit in the long run, pursued by the administration, would allow U.S. President Barack’s Obama health reform. There are currently providing free medical benefit the elderly and poor Americans.

As noted in an interview with CNBC Byron Wien, senior investment strategist Pequot Capital, investors in the United States lay in their calculations of the beginning of economic recovery in late 2009, or at the latest – at the beginning of 2010. “The market continues to grow, despite the disappointing data on unemployment, and, in our view, the March will be the absolute bottom of the bottom in the medium term”, – stressed the expert.

At this time the American economy, only 13% of the total incentive funds, and yet the money continues to come on the market will be dominated by “bullish trend.” Nevertheless, the picture may change by the end of 2010, when the crisis means to run out.

Talking about the global economy, experts agree, that now is not about her recovery, but a slow decline. For example, the British economy has declined over the past 6 months, about 4%, and the reduction of the U.S. economy over the past six months amounted to just over 6%.

The future with this trend, the world would be on the verge of another Great Depression: whereas only three years of world GDP fell by 25%. Although, of course, much will depend on the anti-crisis program and the authorities of their plans to help the banking sector.

Fear is the state of the global financial sector. “In order to restore liquidity in the banking sector is needed, but it still is not enough,” – noted Berkeley economist Barry Eyshengrin. This is difficult not to agree: at the beginning of May, published the results of stress tests of American banks.

According to these tests, the U.S. banking system would require at least U.S. $ 75 billion International Monetary Fund (IMF) has proposed a similar test in Europe.

But now it is clear that global financial markets recover only when the banks will be able to rid itself of toxic assets. Maybe, the world is and has been passed the hardest stage of the crisis, but we have to admit that, until the full restoration of the world economy, is still far.