Summers Has No Doubts

I am getting a tad irritated at the advisers the President is surrounded by. I thought Mr. Obama would have better sense than his predecessor, but alas, that does not appear to be the case, at least where economic policy is concerned. What is the burr in my saddle you might ask after that opening? Lawrence Summers, Mr. Obama’s chief economic adviser.
Mr. Summers made the following comment yesterday in an interview as part of the Reuters Washington Summit.:
“There’s really no doubt that the third quarter registered growth, and growth at a nontrivial rate, and every expectation that the fourth quarter will do the same,”
Really, Mr. Summers, no doubt?
Show me the year over year growth in GDP

How about Jobs?
This is from the U.S. Dept of Labor website:
The advance number of actual initial claims under state programs, unadjusted, totaled 503,973 in the week ending Oct. 10, an increase of 51,919 from the previous week. There were 454,065 initial claims in the comparable week in 2008.

The advance unadjusted insured unemployment rate was 3.7 percent during the week ending Oct. 3, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 4,919,556, a decrease of 97,504 from the preceding week. A year earlier, the rate was 2.3 percent and the volume was 3,073,515.

One thing that appears at first glance to argue for Mr. Summers is the ISM Manufacturing numbers available here
While ISM manufacturers survey showed growth in 13 of 18 sectors they also report slower rates of change over the previous month and the 52.6% PMI is actually down from the 52.9% of the previous month. With the dollar at very low levels this could be seen as questionable at the very least.

And while I am on the topic, let’s look at the U.S. dollar.
Here is a chart of the US Dollar Index which weighs the Dollar against a basket of foreign currencies:

Here is what Mr. Summers said about the dollar in the interview yesterday:
“I think the dollar … is going to be the world’s primary reserve currency for … the foreseeable future,” Summers said. “I think the most important thing we can do for the dollar is make sure that it rests on strong fundamentals.”

Really? And what, I wonder, would Mr. Summers offer as evidence that we are in fact ensuring those “strong fundamentals”? I believe a case could be made that we have in fact cast the greenback to the wind in a desperate attempt to keep the economy afloat. Every action the Fed and Treasury have taken for 2 years has eroded the very fundamentals Mr. Summers alleges we must be vigilant in supporting.

One of the things a weak dollar does is make Oil more expensive for us, and the relationship between oil and the dollar is quite clear, the weaker the dollar the higher the price for oil. Here is what Mr. Summers said about oil yesterday:

Summers said the oil price, which hit a one-year high above $81 a barrel on Wednesday, did not risk throwing the U.S. recovery off the rails.
“I think the increase in oil prices is probably … more a reflection of recovery and the expectation of continued recovery than a threat to recovery,” he said.

I guess he forgot that he said this to the IMF back in 2000 where he was pointing out the negative effects of energy prices on economic growth:
“a sharp rise in the price of oil is an important concern for consumers and businesses around the world”
Link to the Whole speech

I am wondering if his time in the ivy covered halls at Harvard exposed him to poison ivy, because I am scratching my head over the comments he is making. To say there is “no doubt” of growth in the economy is some of the most incredible “talking one’s own book” that I have ever seen, and in light of such statements Mr. Summers has the credibility of a penny stock pump and dump scam artist. What’s next, is he going to be pitching an Economic Policy Robot?