Moody's chief economist: Lawmakers need to 'get it together' to save economy

Mark Zandi, chief economist for Moody's Analytics said that while he believes the U.S will be able to avoid a second recession, pressure is on lawmakers to "get it together."

Speaking on CBS's Face the Nation Sunday, Zandi agreed with President Obama's assessment that the chances for a second recession were low, but said that Congress had a short time to act to revive the economy.

"I think clearly the risks are very high. People are extremely nervous. Businesses are shell-shocked. But I think with some good policy-making we'll be able to avoid a recession," said Zandi.

But the uncertainty from the protracted debt-ceiling negotiations and the lingering partisanship that's hampered efforts to boost the economy were taking a toll.

"We can see what damage that has done," he said of the debt-limit debate. "So we can't go through that again. They have to get it together. And they have to come to terms and do it by the end of November.

Zandi said Washington needed to "follow through on the debt-ceiling deal." "They've got to come to terms over the next several months with respect to some further future deficit reduction, about $1.5 trillion worth," he said.

He also called for more immediate support for the economy and praised proposals to extend the payroll tax holiday. "We need to extend that in 2012. Otherwise the drag on the economy will be too great," cautioned Zandi.

Zandi pointed to positive signs for American businesses. They are "getting their cost structures down, getting their profitability up, getting their balance sheets in order," he said.

While businesses are still reluctant to start hiring new workers, they had little reason to layoff employees, a sign we would avoid a second recession according to Zandi.

Unlike Standard & Poor's which downgraded the United States's debt in July, Moody's has maintained the nation's AAA rating, but placed it on watch for a possible downgrade.

On Aug. 15 Moody's lowered its expectations for the nation's economy through 2011, cutting expectations for growth. The credit-rater pointed to weakened business and investor confidence and the uncertainty from the prolonged debt-ceiling negotiations for the move.

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