Economy Not 'Out Of The Woods' Despite Market Upturn, Summers Says
Obama adviser says there is still a long way to go towards an economic recovery.
March 15, 2009 — -- Though the markets rose this week for a change and some big banks announced small profits, President Barack Obama's top economics adviser warned this morning that it's too soon to tell if the economic bottom is in sight.
"No one can make that judgment," said Lawrence Summers, director of the White House National Economic Council, on "This Week with George Stephanopoulos."
"I wish I could say that the fact that the stock market was up meant that the country was out of the woods or the fact that consumer spending had been strong meant that the country was out of the woods," Summers said.
He warned that the road to reviving the economy will be long.
"While there is signs that some of the things that the president is doing are starting to have effects, these problems did not get made overnight," he said. "They didn't get made in a year. And they're not going to get fixed very rapidly, either.
"Clearly, the fact that consumer spending was like a ball falling off a table through the holiday season and that there does seem to be some sign of stability in January and February is better than if that were not the case," he added. "But we've got an economy that's losing 600,000 jobs a month. That's probably not going to stop imminently."
On reports that Citigroup, Bank of America and JPMorgan have been profitable so far this year, Summers said that, while promising, the progress does not indicate that public trust in the banking system has been restored.
"There are very fundamental issues in the banking system, principally having to do with this very large quantity of so-called toxic assets that people don't understand very well," he said. "And so they don't have the trust on which a financial system depends, and which inhibit, because of all of that uncertainty and distrust, their capacity to lend.
"While this is encouraging information, it doesn't mean that that problem is being removed," he added. "It's a problem that's going to take time. And it's a problem that's going to take strong policy."
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