Summers: White House Stimulus Action May Have Stabilized Consumer Spending

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Summers: White House Stimulus Action May Have Stabilized Consumer Spending

UPDATED 12:09 p.m., below, with Q-and-A:

Larry Summers, President Obama's top economic adviser, just concluded remarks to the Brookings Institution and said the president's stimulus plan may be working.

"It is surely too early to gauge the broader economic impact of the president’s program," Summers says. "But it is modestly encouraging that since it began to take shape, consumer spending in the U.S., which was collapsing during the holiday season, appears, according to a number of indicators, to have stabilized."

Summers added: "Already, {the stimulus plan's} impact is being felt by cops and teachers who would have been laid off but whose jobs have been saved—it may retain 14,000 teachers in New York alone. It will, for most American workers, be felt in the coming weeks as withholding schedules are adjusted, in continuing unemployment insurance benefits and health benefits for hundreds-of-thousands of workers who already would have done without, and in contracting already underway with respect to tens-of-billions of dollars of infrastructure projects across the country."

Q-and-A UPDATE:

-- Asked about the massive amount of federal debt being incurred by the stimulus plan and budget, Summers said: "If my speech was intended to persuade you of one thing, it's that {the crisis} is not a set of economic processes that would simply and automatically fix themselves if you didn't act."

He continued: "I track the markets very closely and my reading is that the central variable is whether we are successful in establishing confidence that the economy will recover and growth will be restored and we will have a sustainable expansion. If we put that at risk in the name of some generalized concern about austerity, we would be doing the wrong thing by the economy and ironically, even doing the wrong thing by the markets."

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http://voices.washingtonpost.com/economy-watch/2009/03/summers_bubble_economy_must_be.html?hpid=topnews