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Summers and Jarrett Provide Hints of What Is To Come

Posted by Larry Doyle on April 27, 2009 8:57 AM |

Larry Summers threw some cold water on the economy yesterday morning in stating his belief the economy will continue to decline for some time to come. Specifically,

“I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers said today on “Fox News Sunday.”

Is Summers positioning the administration for a forecast more in line with IMF projections than the Congressional Budget Office? Recall that the IMF believes the U.S. economy will have flat to only slightly positive growth in 2010 with a double digit unemployment rate. Those projections are decidedly weaker than projections previously employed by the administration.

Is Summers starting to manage expectations downward given what he sees on the horizon? I believe so.

Furthermore, Valerie Jarrett, senior economic advisor, offered hints of administration plans for our banking system this weekend, in stating:

“Whether management changes occur, whether banks are asked to raise more capital, all of that’s going to come forth in the coming week,” Jarrett said on CNN’s “State of the Union” program today.

My instincts tell me that an advisor in Jarrett’s position releases that statement in preparation for exactly those moves. Will this be Vikram Pandit’s last week at Citigroup? Will Ken Lewis be forced out at Bank of America? I think the odds for either of those moves – if not both – just increased.

Management of any organization, including the White House, needs to maintain credibility by providing a reasonably accurate flow of information. The Sunday morning talk shows provide a forum and I think Summers and Jarrett provided solid hints at what is to come from the White House in the days and months ahead. Bloomberg provides a full summary of these points and others, Summers Says U.S. Economy to Decline ‘For Some Time.’


  • fiscalliberal

    Larry – I am not a big fan of Larry Summers, but it is refreshing that they are managing expectations down, in part because the numbers are just not there to support any good outlook.

    Most disturbing to me is no sign of changes in banking, Wall Street management or practitioners in terms of acknowledgement that their industry went out of control, put welfare queens to shame and they themselves are not proposing any changes.

    More over Treasury seems to be focused in protecting status quo versus reform. A lot of talk so far, but little action. The banking and wall street lobbyists seem to be reigning supreme. Worse, the lay media is not making any attempt to educate the public, probably because of advertising revenue’s.

  • lizzy

    I wouldn’t buy a car from the twits Obama has installed to overse the destruction of the American auto industry. Their grandstanding about credit cards is ludicrous. I’m looking for the space ship get away car and putting my money in the Bank of Mattress.

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