WASHINGTON, Dec 22: As a massive stimulus measure to help spur recovery from recession and the September 11, attacks appeared dead in Congress, economists are now debating whether the struggling US economy needs it after all.

Although a report released on Friday showed a 1.3 per cent rate of economic decline in the third quarter the worst since 1991 some analysts say the economy is on a path to recovery already in early or mid-2002.

The economy is expected to recover thanks to the 11 interest rate cuts by the Federal Reserve, the first installment of the $1.3 trillion tax-cut bill enacted this year and other spending programs.

Lack of additional stimulus won’t delay the timing of recovery, which we expect will arrive by spring. But it could affect the strength of the recovery, said Merrill Lynch chief economist Bruce Steinberg.

There is already a huge amount of policy stimulus in the pipeline. ... Roughly $90 billion of fiscal stimulus has already been enacted. Despite the lack of additional fiscal stimulus, we still believe that the economy can be growing at a five per cent rate by the second half of 2002.

Congress adjourned for the year-end holidays without delivering a stimulus bill. In October, the House passed a $100 billion package, and then reworked it in recent days in an effort to win over Democratic senators.

But in the Senate, where Democrats had backed a separate $73 billion measure heavy on aid for the unemployed and health care benefits, no deal was reached.

US Chamber of Commerce president Thomas Donohue criticized the Senate for failing to act.

If there was ever a crucial time to put aside partisanship for the sake of our weakened economy, it is now, said Donohue. Unfortunately, due to the impasse in the Senate, our nation’s struggling businesses and unemployed workers are left with a lump of coal this Christmas.

But economists appeared mainly unperturbed by the lack of action.

The failure by Congress to pass a fiscal stimulus programme will curtail growth slightly, but conditions are still in place for a strong recovery starting early next year, said Henry Willmore of Barclays Capital.

The lack of a new stimulus package does little to change our positive growth outlook for the US in 2002, said economist Robert Sinche of Citibank.

Alfred Goldman of AG Edwards noted, The stimulus bill would have been icing on the cake, but the economy and the market will continue to heal without it.

Goldman added that some analysts suggest that no bill was better than a bad bill as the negative impact of politics had more than overshadowed the potential economic benefits.—AFP