Former Chicago Fed President Michael Moskow says its all about the other 's' word for the U.S. economy.
At the CME Global Financial Leadership Conference in Florida, Moskow told Maria Bartiromo the 3.5% GDP gain in the third quarter was a little bit higher than consensus with a lot driven by special programs such as 'cash for clunkers.'
Moskow told Bartiromo 'stimulus' has been the driving factor of this economic recovery. Without it, Moskow said the question of sustainability comes into play.
Moskow said "when stimulus is taken away, the private sector has to pick up the slack." The former Chicago Fed President said the economy will rely on consumer spending with consumers accounting for 70% of the economy.
When asked about Washington spending and the projections that the Congressional Budget office has made, Moskow told Bartiromo "it still shows an unsustainable path for federal spending and for the deficit." Moskow said the government needs to cut spending or increase revenue. One avenue he mentioned is to address "entitlement spending on the fronts of Medicare, Medicaid and Social Security.
Seems like Washington has a lot more work to do!
Donna Burton contributed to this article.
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