April 26th, 2009
12:00 PM ET
5 years ago

Summers: economic decline to continue 'for some time to come'

Larry Summers said the recession will continue for 'some time to come.'
Larry Summers said the recession will continue for 'some time to come.'

WASHINGTON (CNN) – One of President Barack Obama's top economic advisers predicted Sunday that the economic downturn will continue for the next several months despite some signs that a recovery may take root by the end of 2009.

"I suspect that the economy will continue to decline for some time to come," National Economic Council Director Larry Summers said. But "I do think if you look at the consensus of professional forecasters, that consensus suggests a somewhat better performance towards the end of the year."

The former Clinton administration treasury secretary, speaking on the show "Fox News Sunday," noted that were several indications that the economy was starting to turn the corner.

"Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically," he said.

"Today, the picture is much more mixed. There are some negative indicators, to be sure. (But) there are also some positive indicators."

Among other things, Summers highlighted a recent spike in mortgage refinancing, as well as a substantial reduction in credit spreads for consumers.

Summers warned, however, that it will take at least half a year for the administration's recovery program to start impacting the economy in any significant manner.

"Experience suggests that ... even strong plans take time, take six months or more, to have their impact on the economy," he said.

He also indicated that rising unemployment would continue to be a nationwide problem.

"If you look at the pattern in the economy, it was clear that there were going to be sharp declines in employment for quite some time this year," Summers said.
Turning to the question of the struggling U.S. auto industry, Summers expressed hope that Chrysler might be able to avoid what many analysts now believe is an imminent bankruptcy. The company is facing a Thursday deadline to come up with a viability plan that includes a merger with European automaker Fiat.
"We're hopeful that the negotiations (with Fiat), which have been proceeding with great energy, are going to conclude successfully. It's in everybody's interest, we believe, to see these negotiations succeed," he said.
At the same time, however, Summers was careful to minimize the negative fallout of a possible Chapter 11 bankruptcy filing for Chrysler.
"In certain circumstances, a bankruptcy ... is really about change in legal form that actually protects the company and enables it to function more effectively," he said.


Filed under: Economy • Larry Summers
soundoff (38 Responses)
  1. ron

    Hmm kind of like the weather person announing that summer is coming and fall will soon follow. Historically our economy goes in these cycles despite our best efforts to eliminate them we cannot control it. The markets will go up, then down then back. What killed us in this case was the garbage hopme loans produced by fannie mae and freddie mac, and pushed for by organizations like ACORN

    April 26, 2009 01:25 pm at 1:25 pm |
  2. jude

    the people they [gov't] got overseeing this recovery its like asking the fox to guard the hen house. ain't that right mr. summers. just like the saings and loan scandal someone benefits. 49 million republicans i wonder if they are really feeling any pain form their debacle ; the party of the haves and have-mores? from what i observe you republicans ain't doing bad at all.

    April 26, 2009 01:33 pm at 1:33 pm |
  3. susie

    Do not blame the Democrats, everything bad is the Republicans fault.

    April 26, 2009 01:37 pm at 1:37 pm |
  4. Lynda/Minnesota

    Perhaps if the republican congress has addessed the issues concerning Fannie Mae back in '04 when an audit showed massive problems we might not be in the economic situation we are in now. However, rather than immediately address the situation, congress sat on it until Oct. 06, when a regulatory bill was finally drafted. Because Bush promptly stopped the bill, it never made it to the Senate. Adding insult to injury, G.W. expanded the SHOP program in '02 to include 5 million more low income families to qualify for mortgages than had been able to under Clinton in 1999. Then, in 03, Bush signed the Zero Downpayment Act, thus adding even more low income families to the books. All done with a republican majority in the House and Senate.

    April 26, 2009 01:46 pm at 1:46 pm |
  5. Chris

    Well S Callahan, I'm not going to get into an argument with you. But perhaps whats wrong with our way of life is that people try and look to the imaginary man in the sky to fix all of our problems.

    April 26, 2009 01:49 pm at 1:49 pm |
  6. Fan of Common Sense

    Yeah, the decline will continue.......like for the next four years.

    April 26, 2009 01:52 pm at 1:52 pm |
  7. Palin Power

    The economic will truly recover when Palin defeats Obama in 2012 and fully implement Palinomics. Only Palinomics has the ability to save this world economy from going into a complete collapse.

    April 26, 2009 01:53 pm at 1:53 pm |
  8. Texas Teacher

    Geo. W. Bush and Dick Cheney have run this country into the ground over greed... not growth, but pure greed for both the wealithest of their buddies and themselves. They took us into a war because they wanted to. And I will never feel that they did not have a hand in 9/11. They were taking over the country for the wealthy and the Republican party. They thought we were a bunch fools eager to be led over the nearest cliff by their snake oil sales techniques. It nearly worked again... but the intelligent people of this country, the silent majority, stood up and said we have had enough!

    April 26, 2009 02:08 pm at 2:08 pm |
  9. John-Sturgis, S. Dakota

    The republicans who are screaming socialism today, will be at the front of the line tomorrow accepting the praises for the economic recovery. Americans won't forget the GOP chants for failure, led by the GOP cheerleader Rush Limpbaugh. Not a typo...fact.

    April 26, 2009 02:21 pm at 2:21 pm |
  10. Larry from RI

    Thanks again Republicant's!

    The GOP recession, the gift that just keeps on giving.

    April 26, 2009 02:36 pm at 2:36 pm |
  11. Simmy

    We're in an economic rain storm now, but sunshine is about to peak through and dispel the clouds...... Be patient -- Have faith....God bless America, land that I love...

    April 26, 2009 02:45 pm at 2:45 pm |
  12. Alex

    The economic decline will continue until Goldman-shysters like Summers and Geithner are fired!

    April 26, 2009 04:31 pm at 4:31 pm |
  13. Gary

    haha he fell asleep at a white house economic meeting!

    Of course the economic decline will continue. We have too much debt: mortgage debt, credit card debt, corporate debt and federal debt. Obama's plan is to borrow and spend $1.5 trillion this year and another $3 trillion over the next 3 years. This will crowd out the credit market, lower our nation's credit rating, devalue the US dollar and sufficate our entire federal budget (this even worse than Bush including the war spending, ugh!) – – we will suffer with a bad economy until someone realizes that we need to cut spending, balance the budget, get people back to work, stop promising people free things, drill for american oil, use more alternative fuels, improve our school system and encourage people to buy american made products. When will our leaders get it????

    April 26, 2009 04:33 pm at 4:33 pm |
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