Asked what the government should do next, Kroszner said: " During the most recent meeting of the Federal Reserve, it decided to bring a little more support to the economy by not allowing its balance sheet to shrink. Now they are re-investing those proceeds in treasury securities to maintain the size of the balance sheet. The Fed is ready to provide support and understands that it needs to if necessary to provide support for growth."

However, paraphrasing statements from Federal Reserve Chairman Ben Bernanke, he said: "The Federal Reserve can not do it all by itself. It is only one actor and there have to be other policies to be undertaken. The Fed can provide the necessary conditions for support to prevent deflation and keep interest rate low, but hiring and investment will only occur when there is enough certainties in the fiscal side."

Talking about the current uncertainties, Kroszner explained: " Many experts said that the fiscal situation in the U.S. is not sustainable. But there is not a clear solution for that. This has created a lot of uncertainties down the line. Also it is not clear how this will be paid for."

In addition, he said: "Some tax cuts occurred in 2001 will expire by the end of this year. If some of those tax cuts expire, it will dramatically increase tax on investment, capital gains and potentially affect small business. In this case, businesses will not gain enough confidence to hire until the fiscal situation is clarified."

Therefore, he believes that a key thing for the government to do is try to have some clarity on the fiscal side to provide the confidence to banks and firms to start hiring permanent workers instead of temporary workers.

Looking into the future, the professor of economics said: "We will be able to come back and restore growth eventually but we may not be back for a while. We are not going to get the smooth path back to recovery but I do think the fundamentals are there, even if it may be a little rocky to get the boat sailing smoothly into the waters. It will probably take years rather than months."

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