Tags: us | economy | growth | consumer | spending

Summers: World Shouldn't Rely on US Consumers

Sunday, 03 Oct 2010 03:46 PM

U.S. trading partners should no longer rely on American consumers to drive global growth, said Lawrence Summers, the departing director of the National Economic Council.

“The global economy needs to be rebalanced,” Summers said in Washington, speaking by video link to an economic development conference in Yalta, Ukraine. “It can’t have the United States consumer being the single engine of global economic growth.”

Summers will return to Harvard University, where he has served as president and is a professor on a two-year leave, by the end of the year, the White House said last week. He leaves the Obama administration’s economic team at a time when the U.S. is climbing out of the worst recession since the 1930s.

“Growth, while clearly still unsatisfactory, is positive,” Summers said in response to questions. “The process of recovery is under way.”

Reports have showed U.S. manufacturing expanded at a slower pace, while consumer spending increased, underlining the Federal Reserve’s forecast for a “modest” pace of growth in coming months.

The Institute for Supply Management’s factory index dropped to 54.4 in September from 56.3 the prior month, the Tempe, Arizona-based group said. Readings greater than 50 signal growth. Consumer purchases increased 0.4 percent in August for a second month, more than forecast by economists.

Summers also warned nations against interfering in currency markets. “When governments seek to manipulate exchange rates for competitive advantage, it rarely ends well,” he said.

The House of Representatives voted for a measure that would let domestic companies petition for duties on imports from China to compensate for the effect of a weak yuan. China said the legislation would do nothing to cut the U.S. trade deficit and only risk harming growth. The Senate won’t take up its version until after the November election, said Senator Charles Schumer, a New York Democrat.

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U.S. trading partners should no longer rely on American consumers to drive global growth, said Lawrence Summers, the departing director of the National Economic Council. The global economy needs to be rebalanced, Summers said in Washington, speaking by video link to an...
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2010-46-03
 

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