Former U.S. Treasury Secretary Larry Summers fears that US economic growth has hit stall speed and isn’t close to getting its mojo back.
“I'm concerned that growth will not pick up,”
he told Bloomberg TV. “I'm concerned that we have seen a fair amount, a moderate amount of growth, in the U.S. Over the last five years but it has all been cyclical,” he said.
“I am worried that … we are not going to succeed as a country unless we get the underlying growth rate of our economy up by a significant margin.”
A surge in imports lifted the U.S. trade deficit in March to its highest level in nearly 6-1/2 years, suggesting the economy contracted in the first quarter.
Meanwhile, Summers said he doesn't think "the days of normal being a 4% interest rate are going to return any time" in the foreseeable future.
"I don't think the economy has the underlying strength to maintain a basic momentum of growth at a 2% real rate plus a 2% inflation rate. I think the increasing awareness of that in markets is going to act as a restraint that keeps medium and long-term yields low," he said.
"I also think there is a danger, a quite significant danger, that people will confuse the one-off adjustment when our economy gets competitive and stronger because of, for example, a weaker euro with underlying growth. I think the supposition that we are out of the woods in Europe is not awarded supposition."
Separately,
Summers also spoke with Fox Business Network (FBN) about the economy and industrialization.
“I am still concerned about secular stagnation in the industrialized world,” he said. “We are still having great difficulty maintaining reasonable monetary conditions and adequate rates of growth,” he said.
"It is crazy that at a time of unprecedentedly low-interest rates, unprecedentedly high rates of non-employment for men who work with their hands, that we are doing less public investment than at any time since the Second World War relative to the economy,” he told FBN.
When asked about infrastructure, Summers said “Carrying oil on trains is a 20th century technology, and not the last half of the 20th century. We need an adequate pipeline infrastructure,” he told FBN.
“We should not have much inferior cellphone service to many other countries. We should not have inadequate broadband,” he told FBN.
Highlighting
the Bloomberg TV interview:
SUMMERS ON CHINA
“I think they've got a very difficult set of challenges. They have proven themselves highly competent so often in the past that you can't write off the prospect of success. But Normal is a new version in growth rates and that would mean a very substantial slowdown for them. Normal is that is very difficult to fight simultaneously financial bubbles and credit induced slowdowns. Because of what you do to reduce credit induced slowdowns can exacerbate the bubble and vice versa. You are seeing growing signs of fraud in their equity markets, even as you are seeing signs of a slowdown. You are seeing them move toward the exhaustion of the easy growth that comes from moving from rural areas to more productive and urban areas. I think they have a very serious set of challenges ahead of them.”
SUMMERS ON HILLARY CLINTON
“I will let Mrs. Clinton speak for herself. I have known her for 20 years. I have enormous admiration for her. I certainly don't have any formal role or expect having any formal role at all with respect to her campaign. I certainly think she needs to be listening given the novelty of the problems we face to a whole range of new voices and new perspectives because I think the constellation of economic challenges that we face right now is really quite different than the constellation we faced in the past. It is too little demand rather than too little supply. It is the inflation. In this centrally got to do with any -- inequality, something that is also rooted in our politics. We've got a quite different constellation and we all need to been -- the benefit of all the thinking we can possibly get. “
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