“The administration earlier this year forecast that the economy would grow next year by 3.5 percent, then by 4 percent, then by 4.5 percent after that. I think that’s highly unlikely to happen. My guess is that the economy will grow in real terms at closer to 2 percent a year for the next few years.”

Niall Ferguson, a member of the Belfer Center’s board of directors, was interviewed on “The Charlie Rose Show” on November 3, 2009.

For the full interview, go to: http://www.charlierose.com/guest/view/247

Economy Snaps Long Slump
Wall Street Journal
October 30
Quoted: Jeffrey Frankel
Topic: U.S. economic recovery

The U.S. economy expanded in the third quarter after shrinking for four consecutive quarters, marking an apparent end to the worst recession since World War II. But the recovery is expected to be slow and painful, as companies shed jobs and credit remains tight.

Gross domestic product expanded at a 3.5% seasonally adjusted annual rate in the quarter ended in September, a rise that leaned heavily on government spending. Some of the largest components of growth came from spending on cars and house building — two areas propped up by federal programs. …

The beginnings and ends of U.S. recessions are declared by the National Bureau of Economic Research, a nonprofit research group that defines recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.” The group says the current downturn started in December 2007, and it isn’t likely to declare an end for some time. Still, Jeffrey Frankel, a Harvard professor and a member of the NBER’s Business Cycle Dating Committee, says the recession is likely over.

“My best guess is that we will end up declaring the trough [of the recession] was in the middle of the year sometime,” he said.

http://online.wsj.com/article/SB125681908931715735.html

“The idea that the financial crisis is over is a fantasy and it looks like the numbers bear that out.”
– Niall Ferguson, member of the Belfer Center’s board of directors
Read more

“We need to recognize that lack of demand will be a major constraint on output and employment in the American economy for the foreseeable future.”

Lawrence Summers, on leave from the Belfer Center’s board of directors to serve as director of the National Economic Council, gave a speech to the National Association for Business Economics, which the New York Times cited in “Summers: Obama Policies Averted Economic ‘Abyss.’” The article was published online on October 12, 2009.

For the full article, go to: http://www.reuters.com/article/politicsNews/idUSTRE59B3XE20091012

“‘The avoidance of the depression risk, which appeared very real last winter,’ [Summers] said, ‘combined with the reality of an economy well short of potential, confirms the wisdom of the president’s judgment in pushing for a large and substantial recovery program that was designed to act rapidly, but also to act on a sustained basis.’”

Lawrence Summers, on leave from the Belfer Center’s board of directors to serve as director the National Economic Council, was quoted in “A Shot in the Arm, Not a Kick in the Pants,” which the New York Times published on October 7, 2009.

For the full article, go to: http://www.nytimes.com/2009/10/07/us/politics/07stimulus.html
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Summers was also profiled in “Inside the Crisis: Larry Summers and the White House Economic Team,” which the New Yorker published in the October 12, 2009, issue.

For the full profile, go to: http://www.newyorker.com/reporting/2009/10/12/091012fa_fact_lizza?currentPage=all

“[W]hat I hope is that … they will learn this was a period when the large interconnected systems that undergirded the modern economy got much stronger – healthcare, education, energy – and when the protections that were forced by modernity with respect to a strengthened system of financial regulation, with respect to a global environment, got put in place. That’s what I hope my grandchildren will learn when they study the history of this period.”

Lawrence Summers, on leave from the Belfer Center’s board of directors to serve as director of the National Economic Council, was interviewed by Maria Bartiromo at the “First Draft of History” conference, which the Atlantic, Aspen Institute, and Newseum hosted, on October 2, 2009.

For highlights from the interview, go to:
http://firstdraftofhistory.theatlantic.com/analysis/post.php

“We have traveled a remarkable distance over the past six months in pulling our economy back from the brink of economic catastrophe. The wide-ranging efforts taken by the Obama administration…have helped pull the economy out of a nosedive, and have put us on a path toward a sustained economic recovery. While we still have a long way [to] go, we are far closer to that recovery today than we were in January.”’

Lawrence Summers, on leave from the Belfer Center’s board of directors to serve as director of the National Economic Council, wrote a memorandum to Congress regarding the American economy, which was published on August 4, 2009.

For the full memo, go to: http://www.scribd.com/doc/18173193/Memo-to-Congress-from-Larry-Summers-on-the-American-Economy

“There’s a difference between having an expansion and an economy that has recovered.”

Lawrence Summers, on leave from the Belfer Center’s board of directors to serve as director of the National Economic Council, was quoted in “The Recession is Over,” which Newsweek published in the issue dated Aug. 3, 2009.

For the full article, go to: http://www.newsweek.com/id/208633

“…Basically, there are a number of technical ways that the Fed can, in principle, stop these excess reserves. Remember, there’s more than $800 billion of excess reserves. A year ago, there was about $3 billion. More than $800 billion of excess reserves, to stop that from fueling inflation as the economy begins to recovery. In my mind, the big problem is not whether he can do it technically, but whether raising interest rates, which is what any one of those strategies would do, is going to be acceptable to the Congress.”

Martin Feldstein, a member of the White House Economic Recovery Advisory Board and the Belfer Center’s board of directors, was interviewed by Bloomberg TV on July 21, 2009.

For the full interview, go to: http://www.bloomberg.com/avp/avp.htm?N=video&T=Harvard%E2%80%99s%20Feldstein%20Sees%20Risk%20of%20%27Double-Dip%27%20Recession%20&clipSRC=mms://media2.bloomberg.com/cache/vVrW.Szam9YQ.asf

“But my reading of the evidence does not agree with that of those who claim that the economy is actually improving, and that a sustained cyclical recovery is likely to begin within the next few months. Although the stimulus package of tax cuts and increased government outlays enacted earlier this year will give a temporary boost to growth, we are unlikely to see the start of a sustained upturn until next year at the earliest.”

Martin Feldstein, a member of the Belfer Center’s board of directors, wrote “Has a Recovery Really Begun in the U.S.?” which the Korea Herald published on June 2, 2009.

For the full oped, go to: http://belfercenter.ksg.harvard.edu/publication/19093/