Tags: Larry | Summers | Weak | Demand | Biggest | Challenge | US

Summers: Weak Demand Is Biggest Challenge for US Economy

Tuesday, 28 Sep 2010 12:04 PM

Lack of demand is the biggest challenge facing the U.S. economy, said Lawrence Summers, the departing director of the National Economic Council.

“I don’t see how anybody can look at the facts of the American economy right now and not recognize that the overwhelming problem is a shortage of demand,” Summers said today at a conference in Washington. “There’s no question that many, many businesses feel frustrated.”

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 still recovering from the worst recession since the 1930s, and following November elections in which the president’s party faces the possible loss of control of the House and perhaps the Senate.

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“While no one can be satisfied with the current economic performance,” Summers said, “you do have an economy that is moving upwards, that is generating economic growth and that it was far from clear that that would be the case some time ago.”

The unemployment rate last month was 9.6 percent, compared with 7.7 percent in January 2009, when President Barack Obama took office. The economy expanded at a 1.6 percent annual rate last quarter after contracting at a 4.9 percent pace in the first three months of 2009.

“The challenge now is to build on that progress and accelerate the pace of growth,” Summers said in response to questions posed by Ron Brownstein, editorial director at National Journal, which sponsored the event.

Aid to Small Business

Obama signed legislation yesterday that will cut taxes and provide credit help for small businesses, calling it an essential step for job growth in a slow economy.

The small-business legislation provides $56 billion worth of tax cuts over the next 12 months, with the bulk coming through “bonus depreciation,” which allows companies to more quickly write off the cost of purchases. It also revives stimulus provisions cutting fees and increasing limits on loan guarantees offered by the Small Business Administration.

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Lack of demand is the biggest challenge facing the U.S. economy, said Lawrence Summers, the departing director of the National Economic Council. I don t see how anybody can look at the facts of the American economy right now and not recognize that the overwhelming problem...
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Tuesday, 28 Sep 2010 12:04 PM
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