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Summers: More Economic Pain in Store

By    |   Wednesday, 15 Jul 2009 09:38 AM

While some in the White House have gone out of their way to present a rosy view of the economy, economist Larry Summers is more forthright.

Summers, who as director of the National Economic Council may be the president’s most influential economic adviser, told the Financial Times, “I don’t think the worst is over.”

More jobs likely will be lost, and GDP could fall further, he said.

“What does appear to be true is that the sense of panic in the markets and freefall in the economy has subsided and one does not have the sense of a situation as out of control as a few months ago,” he said.

There has been much talk about how the government will withdraw its stimulus measures, but Summers doesn’t appear too worried on that score.

“I actually think that the right measures for doing the right things about the long-run deficit will also increase confidence, hold down long-term interest rates and capital costs, make mortgages cheaper, make mortgage rates lower,” Summers said. And that in turn “will contribute directly to recovery.”

As a result, “I don’t buy the notion that there is some conflict between the budget imperative for growth and some other budget imperatives,” he said.

Others aren’t so optimistic. “All of the policies we’ve put in place since the housing bubble burst and the stock market crashed … have made the crisis worse,” financial author Stephen Moore told Moneynews.

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Economy
While some in the White House have gone out of their way to present a rosy view of the economy, economist Larry Summers is more forthright.Summers, who as director of the National Economic Council may be the president’s most influential economic adviser, told the Financial...
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Wednesday, 15 Jul 2009 09:38 AM
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