Summers: Economy could rebound in late 2009

The financial system could begin to return to normal in about six months and the economy begin to rebound at the end of next year, but fundamental changes needed to create long-term prosperity could take years, said former Treasury secretary and Harvard University President Lawrence Summers.

Summers, speaking before the Greater Boston Chamber of Commerce this morning, said the nation must tackle a variety of challenges that go beyond responding to the current financial crisis. The nation must address issues of economic fairness and income inequality, health care, and energy, Summer said.

"It takes time," Summer said. "It is important not to hold out the prospect of silver bullets."

Summers, an advisor to Senator Barack Obama, the Democratic presidential nominee, said the nation has reached a crossroads unlike any in his professional career.

Summers said government policies must not only restore the financial system, but also reform an economy in which most of the benefits have flowed to the wealthiest one percent in recent years.

"With the right set of policy choices, we have a chance to build a prosperity that increases more rapidly, is more stable, and is more inclusive," he said.
(Robert Gavin, Globe staff. File photo of Summers: Chris Kleponis, Bloomberg News.)