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. phoenix86

    Economic decline will continue as long as Obama remains in office and his tax & spend policies remain in effect.

    April 26, 2009 12:01 pm at 12:01 pm |
  2. sb

    Will Summers stop Bloomberg and the MTA from increasing fares!!!

    April 26, 2009 12:07 pm at 12:07 pm |
  3. Mike

    I disagree, Phoenix... at least with your mindset. How and why would anyone predict or hope for economic decline to continue. I think we owe President Obama and his Administration, not to mention our country, a bit more good will than that.

    Recession is never easy, for any country or market anywhere, but if you look around you right now you may find that this recession is bringing out the best in some of you and in some of your neighbors. It forces us to tighten our belts, reevaluate our priorities, and make more conscious and intelligent decisions... or we fail. Nose to the grindstone, Americans... don't get down.

    April 26, 2009 12:10 pm at 12:10 pm |
  4. Chris

    The economic crisis is due to the irresponsibility of many, not just one person. Obama is the President now so maybe instead of doing nothing to try to help the economy, maybe he should try out some demand-side economics (you know how democrats think the economy should be run)...oh wait!

    ^^^For you slow people, I was being sarcastic.^^^

    Maybe instead of attacking Obama about the current economic crisis you should be grateful that he is doing all that he thinks is right to help us. There are significant differences between Democrat and Republican economic policies, and frankly...it's the Dems. turn.

    April 26, 2009 12:11 pm at 12:11 pm |
  5. john kokesch

    it took George Bush eight years to put this country in this terrable shape .the way president obama is going ,within a year we will see unbeleivable progress on the road to recovery.

    April 26, 2009 12:14 pm at 12:14 pm |
  6. The Broker.

    For the USA! "Forever under Borack Obama."

    April 26, 2009 12:14 pm at 12:14 pm |
  7. john kokesch

    it took George Bush eight years to put this country in this terrible shape .the way president obama is going ,within a year we will see unbelievable progress on the road to recovery.

    April 26, 2009 12:19 pm at 12:19 pm |
  8. Brad, California

    Yeah, you've continued to bailed out the financial industry with money provided by the same people that the banks have screwed for years, you've forced more auto industry layoffs while you continue to fund GM with the money the laid off workers are providing. You've continued to pour money into Iraq and Afghanistan. When does it stop? When do American taxpayers become important enough to consider? Is the infrastructure more important than the taxpayers that make it possible, or are the taxpayers not possible without the infrastructure?

    Let the financial infrastructure fail, find its own footing and start over. Even at 8,000, the DOW is still far overvalued. Perhaps we're looking at financial institutions reporting rosy figures now because the accounting rules have changed – anyone can show a profit if you change the accounting rules enough to allow it. And how many quarters can a pig like CitiGroup continue to sell assets to prop up its financial statements?

    The phrase "too big to fail" is NEVER true.

    Washington and Wall Street have created a bigger mess then their combination did in 1929. And in Washington's collective "wisdom," you've chosen to allow the same people in the public and private sectors who created the problems to be the ones with the expertise to correct them.

    What's next Larry?

    April 26, 2009 12:20 pm at 12:20 pm |
  9. Reason

    Does everyone think Obama is the one running things?

    Summers who is one of the Bilderberg group boys and in bed with the PRIVATELY owned Federal Reserve runs things more than Obama.

    Is there any of Obama's cabinet that is not from wall street? Or the federal reserve?

    People need to start understanding who really is running things. And it is NOT Obama.

    April 26, 2009 12:24 pm at 12:24 pm |
  10. very skeptical of economists

    who got us here in the first place

    we are in deep doo doo

    we will be in deep doo doo tomorrow

    forcasts call for continued doo doo

    there, that is as much help as the economists have been

    April 26, 2009 12:30 pm at 12:30 pm |
  11. Margo

    @Pheonix86 "Economic decline" under Obama? Are you kidding me?

    Have you forgotten how the country was gutted, from your constitutionasl rights, to your financial institutions, to your very jobs, under 8 years of Bush and the Republicans?

    Obama and his democratic pragmatism is your only hope. You are lucky to have a person of his intellect, integrity, and compassion.

    April 26, 2009 12:31 pm at 12:31 pm |
  12. P from CA

    I personally don't care for Summers but I think he is just making a statement that we can all see for ourselves. No earth shattering new news.

    April 26, 2009 12:43 pm at 12:43 pm |
  13. Reason

    @Margo

    If you want to talk about constitutional rights why did Obama choose to keep the patriot act?

    One of the first things Obama promised was to get rid of it. So, why did Obama want to keep the patriot act in place? My code of ethics calls this a lie. But, don't worry, there are many more coming..lol.

    No more cool aid for you!

    April 26, 2009 12:47 pm at 12:47 pm |
  14. Gerry

    Summers worked for a hedge fund company 1 day a week and making $100,000 a day & now he is a economic adviser over seeing these these same people. Next we will find out he ows back taxes.

    April 26, 2009 12:49 pm at 12:49 pm |
  15. rich

    I guess Summers just woke up. LOL

    April 26, 2009 12:49 pm at 12:49 pm |
  16. Tayo

    Phoenix86 has always shown through his comment that he's one of the desciples of mighty rush,he has not been objective for once,lets just say he is a Ra,,,,,,st,for him to say the economic problems were obamas fault and until he leaves office for a white before solution can be found.Its pretty shameful!

    April 26, 2009 12:49 pm at 12:49 pm |
  17. Lori

    Many economists are now predicting the economy will turn around near the end of the year. Let's see how the Republicans will spin this one. It's President Obama's fault when the DOW plunged (at the beginning of his presidency) and for the unemployment rates but when they hear the economy is recovering they state 'oh it's just the economy fixing itself the way it always does.' Mitt Romney stated that last week on CNN. GOP, we see the hypocrisy and we're waiting for you in 2010!

    April 26, 2009 12:55 pm at 12:55 pm |
  18. S Callahan

    For some time, that is a fair statement......the state lies not with one individual but us as a people....deny as long as you want..but this is the consequence of not putting God first in all things....and now..the next story is the release of the vials...swine flu to begin...

    April 26, 2009 12:56 pm at 12:56 pm |
  19. phoenix85

    Economic decline was brought about by Bush/Cheney fighting two wars, and his tax cutting & spend policies, we are only beginning to fix all the damage they did in 8 years.

    April 26, 2009 12:58 pm at 12:58 pm |
  20. Qui-Tam Relator

    While our Representatives continue to party in Washington with all of their fund raising friends. I believe that Nero if he were around today would be playing a tune on his violin. WAKE UP AMERICA ! ****************************************************************

    April 26, 2009 01:06 pm at 1:06 pm |
  21. Reason

    @ Phoenix

    So if your wife maxed out your credit card, do you think the answer for fixing your debt issue is to increase and maximize your credit limit with eve higher interest rates?

    You then explain to her that at these interest rates, it is going to take us 40 years to pay it off when we can only afford to pay the minimum due?

    She tells you that she did it to help you get out of debt. Does this make sense?

    But don't worry about it! This is a cool credit card! My kids will have to pay it off when im dead!

    April 26, 2009 01:08 pm at 1:08 pm |
  22. Chenna Benna

    I think many people need a good history lesson when it come to what to do during an economic downturn that we are seeing today. Herbert Hoover believed in smaller government and tax cuts for everyone. His philosaphy was put to the test in 1929 when he decided to cut government spending and taxes during a time when many consumers were saving their money all at once and businesses were trying to save money. This lead to the crash of the stock market which was the beginning of the Great Depression.

    Before president Obama came in office, many economist said that we need to spend in areas that would prop up our economy and create jobs. This president has been focusing on investing in areas within our country that effect our long term and short term economy. I wonder what people will say when we do begin to pull out of this recession next year. I have a suspicion that there will be a lot of back tracking on previous statements.

    April 26, 2009 01:10 pm at 1:10 pm |
  23. MOJerry

    Brad, you're right on with your comments. Taxpayers and the public at large are having to support the same people, banks, and corporations that created this mess. Heaven forbid that we should allow them to miss their payments on their 60' yatcht or their 4th summer home, not to mention their million dollar bonuses or golden retirement plans!

    Government of the wealthy, by the corporations, and for the banks is not what the constitution says, but is the reality.

    April 26, 2009 01:11 pm at 1:11 pm |
  24. We heard the same BS in 1930.....

    and the depression went on and got worse for the next many years-
    Unemployment is at 21% and rising in several areas of the country-
    General Motors is closing for 9 weeks which means all their suppliers are in deep doo doo.

    Isn't Summers the guy who fell asleep the other day during the meeting with the credit card companies???

    April 26, 2009 01:13 pm at 1:13 pm |
  25. Marty

    Bush & Cheney –Geez- the mess you guys created-
    Impeach these guys for economic crises.

    April 26, 2009 01:24 pm at 1:24 pm |
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