July 1 (Bloomberg) -- The U.S. economy will grow for a few quarters and then contract again, said Martin Feldstein, a professor of economics at Harvard University.

“I think we’re going to see a temporary substantial improvement,” Feldstein, the former head of the National Bureau of Economic Research and a Reagan administration adviser, said today in an interview on Bloomberg Radio. “I emphasize the words temporary and substantial.”

Feldstein -- a member of the private panel that dates the start of recessions and recoveries -- suggested the economy will contract into next year, and that the pattern of economic turnaround will be more of a seesaw than what he called “a beautiful symmetrical W.”

The National Bureau of Economic Research Business Cycle Dating Committee said the current recession, the worst in half a century, started in December 2007. Since then the economy has lost about 6 million jobs, and gross domestic product contracted in the final quarter of 2007, the third and fourth quarters of last year and the first quarter of this year.

After the economy shrank at a 5.5 percent annual pace in the first quarter of the year, the change in GDP will be “closer to zero” or “even a small plus” for the April-to- June period, Feldstein said.

“We’ll get a bounce for a few quarters and then it will fade out,” Feldstein said. “We’re now going through the getting-better phase for a while.”

Interest Rates

Regarding monetary policy, Feldstein said the Federal Reserve is well-equipped to reverse course on short-term interest rates, and might have to fend off Congress when it decides to raise borrowing costs to guard against inflation.

“I don’t worry if they have instruments to do it,” Feldstein said. “What worries me is the political hurdle they’ll be facing,” he said, referring to the reaction in Congress to an increase in interest rates.

Still, what happens to long-term rates in financial markets will prove more important for the economy’s prospects, he said in the Bloomberg Radio interview.

“The Fed can set the benchmark rate to be near zero and yet longer-term rates have a life of their own,” Feldstein said. “The benchmark rate may not matter nearly as much as it used to.”

Feldstein also said the Obama administration must reduce the budget deficit, estimated at about 12 percent of gross domestic product this year, to below 5 percent to help contain inflation. He said the country cannot afford the cost of the administration’s plan for reforming the health-care system.

On other topics, Feldstein said that China will be the first major economy to pull out of the global downturn and experience economic growth of 9 percent next year, and that India has avoided severe consequences of the global contraction.

(In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.)

To contact the reporters on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net.

Last Updated: July 1, 2009 10:55 EDT