DAVOS: President Barack Obama’s top economic adviser said Saturday the US is experiencing an economic recovery on paper but a “human recession” because of job losses.
Lawrence Summers, director of the White House National Economic Council, told a panel at the World Economic Forum in Davos that the latest figures showing strong US economic growth suggest Obama’s policies to prevent economic collapse “have been successful.” Most people who looked at the 5.7-percent increase in fourth-quarter growth believe that will continue “at least at a moderate rate for the next several quarters,” he said.
“What is disturbing is the level of unemployment,” he said, with one in five men between the ages of 25 and 54 not working.
That means only 80 percent of men in that prime working age group have jobs, compared with 95 percent in the mid-1960s, he said.
“What we’re seeing in the United States, and perhaps in some other places, is a statistical recovery and a human recession,” Summers said.
Summers said that following “a reasonable recovery” it’s likely that there will still be one in seven, or one in eight men aged 25-54 who are not working.
“That suggests quite profound issues that will ultimately impact politics. They impact the decisions that businesses make and underscore what president Obama said in his State of the Union address a few day ago — the primacy of jobs,” he said.
Obama called for tax incentives to create jobs, saying a greater effort is needed to put people back to work even though his administration has “stopped the flood of job losses.” Summers also suggested “the primacy on maintaining the flow of credit to medium-size businesses” to stimulate job new jobs. “I am very optimistic about our support for an integrated global economy,” he told the forum, an annual meeting of international business, political and civic leaders.
“For a whole set of reasons — the diversity of its population, the openness of its institutions, the way in which it serves as a magnet for people from all over — I think the United States is very, very well positioned to gain from increased global integration,” Summers said. “But it’s going to have to work for people if it’s going to be politically sustainable — and that’s why the jobs, the credit agenda are so very crucial,” he said.
Meanwhile, Obama renewed his pledge on Saturday to make job creation his top priority in 2010 but said it was also critical to rein in a record budget deficit that threatened an economic recovery.
Obama used his weekly radio and Internet address to remind Americans of the various proposals he put forward in the last week to spur job growth and tame a $1.4 trillion deficit.
But before the release on Monday of his proposed budget for fiscal 2011, which begins on Oct. 1, he put a clear emphasis on addressing the deficit problem.
“As we work to create jobs, it is critical that we rein in the budget deficits we’ve been accumulating for far too long — deficits that won’t just burden our children and grandchildren, but could damage our markets, drive up our interest rates, and jeopardize our recovery right now,” he said.
The White House has said Obama is still committed to a promise he made last year to halve the deficit by the end of his term in 2013. The president did not refer to that pledge in his address.
He has said his next budget will include a three-year spending freeze on some domestic programs.
“We’ll launch an unprecedented effort to root out waste, inefficiency, and unnecessary spending in our government, and every American will be able to see how and where we spend taxpayer dollars,” Obama said.
A Pew Research Center study published this week showed 60 percent of those polled viewed reducing the budget deficit as a top priority for 2010, up from 53 percent in 2009.