Recession Is Over, White House Adviser Says

But one adviser admits recovery has only hit Wall Street, not Main Street.

December 13, 2009, 3:45 PM

WASHINGTON, Dec. 13, 2009— -- President Obama's top economic adviser Lawrence Summers today for the first time predicted that job growth would begin as early as this spring.

"I believe that, as do most professional forecasters, that by spring, employment growth will start to be turning positive," Summers told ABC's "This Week."

It's the first time the White House has predicted job growth on such a short timetable.

Summers would not commit to a timeline during an earlier ABC News interview on Dec. 4, the day the last jobs report was released. That jobs report showed the national unemployment had dropped in November, from 10.2 percent previously, to 10 percent. At the time, Summer advised caution.

"Certainly we got an indication that some very serious problems were abating today, but no one should be declaring victory," he said then.

Yet Sunday, he touted those same numbers.

"Make no mistake, we were losing 700,000 a month when President Bush turned the economy over to President Obama. The number last month was 11,000," he said.

"These things happen in stages," he said. "First, GDP goes up. That has happened. Then, hours that are worked by workers who already have jobs go up. That's starting to happen. Then employment goes up. We got very close to that this year, this month, with only 11,000 jobs lost. And then unemployment starts to come down. ... Most professional forecasters are now looking for a return to job growth by spring."

Summers also said the recession was over.

"Today, everybody agrees that the recession is over, and the question is what the pace of the expansion is going to be," Summers said on ABC.

Council of Economic Advisers chairwoman Christina Romer agreed the recession was over in technical terms, but not in the minds of many people.

"You know, there's the official definition, and that talks about just when do you turn the corner, when do you go from plummeting to finally starting to go back up. And I think we have at least in terms of GDP reached that point," Romer said on NBC's "Meet the Press."

But, she added, "For the people on Main Street and throughout this country, they are still suffering, the unemployment rate's still 10 percent."

"What I think the president's always said and what I firmly believe, you're not recovered until all those people that want to work are back to work," she said.

The White House's optimism comes after a week of activity by the president and Democrats to improve the economy.

Last Tuesday, the Obama administration announced it was extending the Troubled Asset Relief Program until October 2010 in an attempt to free up credit for small businesses to expand and for homeowners to secure their mortgages through the administration's housing program.

On Friday, the White House's pay czar, Ken Feinberg, released new rulings on the pay packages for some of the highest-paid employees at companies receiving what the administration deems "exceptional assistance" from the government.

Also on Friday, House Democrats passed financial reform legislation to tighten federal regulation of Wall Street, and create an agency to protect consumers from abusive lending practices, a fund to help failing banks and new rules for the trading of some of the financial instruments that helped cause the crisis.

Summers tied the president's health-care overhaul to efforts to reduce the federal deficit.

"The president's bill will meet what has been the agreed test, that the Congressional Budget Office assesses the bill and concludes that it reduces the budget deficit. To do anything else would be irresponsible," Summers said.

But just recently, the chief actuary for Medicare and Medicaid concluded the current Senate bill would increase national health spending by about $234 billion over the next 10 years, adding a potential roadblock for fiscally-conservative Democrat or Democrat-leaning senators.

Sen. Joe Lieberman, I-Conn., said he could not vote for the bill as it stands now, and is a critic of the "medicare buy-in" proposal, which would lower the Medicare eligibility age from 65 to 55 for Americans who do not have employer-based insurance.

"It will add taxpayer costs. It will add to the deficit. It's unnecessary," said Lieberman.

On Monday the president is convening a meeting with heads of the country's largest banks, to encourage them to do more to lend to small businesses and consumers.

"President Obama is going to be talking with them about what they can do to support enhanced lending to customers across the country," Summers said. "We were there for them. And the banks need to do everything they can to be sure they're there for customers across this country."

Obama will primarily encourage the bankers to give more loans to small businesses and to allow more refinancing and restructuring of mortgages for homeowners.

For example, the president's Homeowner Affordability and Stability Plan, unveiled in February, was an attempt to benefit between 7 million and 9 million families by restructuring or refinancing their mortgages to avoid foreclosure. A White House official tells ABC News that while more than a half-million Americans signed up for the program, financial lenders have moved to refinance or restructure only 30,000 mortgages. Bankers will be told they need to do much more to make this program work.

The president will also express irritation, officials say, with the lavish bonuses these executives are paying themselves this year.

"They're still puzzled why is it that people are mad at the banks," the president told CBS's "60 Minutes." "Well, let's see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in -- in decades, and you guys caused the problem. And we've got 10 percent unemployment. Why do you think people might be a little frustrated?"

The president said "there is no doubt about" the fact that the bonuses are because of the help of U.S. taxpayers. "And what's most frustrating me right now is you've got these same banks who benefited from taxpayer assistance who are fighting tooth and nail with their lobbyists up on Capitol Hill fighting against financial regulatory reform."

ABC News' Jake Tapper and Betsy Stark contributed to this report.

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