White House: data shows U.S. not in recession

By Jeremy Pelofsky and Joanne Morrison

WASHINGTON (Reuters) - The U.S. economy is not in a recession and looks set to dodge one, although it is still unclear when the housing market will bottom out, a top White House adviser said on Tuesday.

"If you look at the data right now, at least by historical standards, we are not in what would normally be characterized as a recession," Edward Lazear, chairman of the White House Council of Economic Advisers, told Reuters in an interview.

Lazear said the housing sector had shown signs of life in recent months, but that bloated inventories were still weighing on the market. "Until we get that inventory cleared out ... I don't think we are going to see a significant turnaround," he said.

Credit was flowing "a bit better" and "there is no question that things are looking better than they did in March," he said. Even with continued troubles in the housing market, the U.S. will likely avoid going into recession, he predicted.

"I don't expect that to happen, but it is a possibility. I think right now that most of the signs that we are seeing are toward a stronger economy rather than a weaker economy, at least as we were compared to a few months ago," he said.

NO NEW STIMULUS PACKAGE

Lazear said the stimulus package that is now putting rebate checks in the hands of consumers and that offers tax breaks to companies to spur spending and investment will likely be enough to help the economy through the current slowdown.

"I think that it would be certainly premature and I would argue not particularly responsible to be thinking about additional stimulus moves right now when we haven't seen the effects of this one and when the economy is not in a downward spiral," he said.

Some economists, Democratic lawmakers and politicians have called for a second stimulus package that would extend unemployment benefits to help buoy the economy.

Rising oil prices are seen to be diminishing the impact of the stimulus package as consumers are being forced to spend a large part of their rebates at the gasoline pump.

"It's time for us to just wait and allow it to work. I think it will work," he said. "If there were no stimulus package, it would be eaten even more by inflation. The fact that you have the stimulus package out there offsets these costs," he said.

(Editing by James Dalgleish)