The U.S. economy looks like it’s in much better shape than several weeks ago, but it’s not out of the woods yet, says Larry Summers, a former top economic adviser to President Barack Obama.

“A double-dip [recession] appeared more likely two months than today,” the Harvard professor tells Yahoo, citing Europe’s latest financial rescue package and the recent surge of U.S. stocks as reasons for the improved outlook.

“But I think the risk is still there, and I don’t think the foundation is there yet for growth at a rate that will significantly bring down unemployment,” Summers says.
__________________________________________________________

Economist Warns: 50% unemployment, 90% stock market drop, 100% inflation.
See the Evidence. Click Here to Watch the Aftershock Survival Summit Now.

__________________________________________________________

He says the economy would need to grow 4.5 percent for one year or 3.5 percent for two years to bring the unemployment rate – now 9.1 percent – down one percentage point.

Larry Summers (Getty Images photo)

“I don’t think we’ve yet shown a foundation for sustained growth above 2.5 percent.” The economy grew 2.3 percent in the third quarter.

Ironically, the solution to the crisis created by too much borrowing and spending is more borrowing and spending, Summers says. “Unless we get more demand going, we won’t generate the income necessary to have growth that will let us move forward.”

Many economists’ agree with Summers’ assessment. “We need to get the jobs machine going and get the housing market moving in the right direction,” Robert Dye, chief economist at Comerica, tells Bloomberg.

“The economy remains in a low-to-moderate growth mode, and that keeps us vulnerable.”