The U.S. government must repair the economy quickly, otherwise…

Economic experts at IHS Global Insight call on Congress and the Federal Reserve for acting with more urgency to stimulate the economy vitality. According to the figures cited by Nigel Gault and Brian Bethune, domestic economists for Global Insight, the expected approval of the economic bailout plan and a new program to revive the consumer credit markets will not bring quick results with several quarters of economic misery ahead.

Both forecasters tell that the government has to implement their stimulus programs in a short time otherwise the U.S. economy may turn out in a deeper recession by the time their plans come into effect. Gault thinks that private economy cannot be left on its own pointing to the lesson we should learn from the Great Depression that is an illustration of ‘what happens if you try to let the private economy sort it out’.

The forecasts of IHS Global Insight experts say that the unemployment rate will unlikely decrease to get to the normal level for several years. They expect the economy to contract at a 6% annual pace in the current quarter, followed by a 3.4% annualized decline in the second quarter with the growth to be flat in the third quarter. Only in the fourth quarter it will grow at a 1.7% annualized rate.

Gault pointed to an undesirable trends observed today when businesses and households are saving as much cash as they can which hampers economy activity. Credit flowing restoration is as urgent as the stimulus plan. Bethune’s calculations show that banks will need between $50 billion and $300 billion in capital.