Larry Summers on the economy

The free fall may be over for the U.S. economy, but the unchecked decline in the stature of top White House economic adviser Larry Summers does not appear to be abating.

The heckling came during a session at the Economic Club of Washington where Summers commented on the slowing rate of decline for the U.S. economy. Thankfully, he didn't use the term "green shoots", a phrase that is quickly wearing out its welcome from overuse.

Summers' comments along with a few thoughts from Mark Zandi at Economy.com are detailed in this report from the Los Angeles Times:

Many analysts still expect job losses to continue through the end of the year and the U.S. unemployment rate -- which reached 8.5% last month -- to hit double digits before declining in 2010.

But while unemployment may continue rising, President Obama's top economic advisor, Lawrence H. Summers, said there was no longer "that sense of a free fall" in the economy.
"There has been a substantial anecdotal flow over the last six to eight weeks of things that felt a little bit better," said Summers, director of Obama's National Economic Council.
...
The banking industry clearly must go through a long period of continued pain. It may eventually need hundreds of billions of dollars in additional aid from the government -- a pill that will be bitter for the country to swallow, said Mark Zandi, chief economist at Moody's Economy.com.

But fears that the government would nationalize banks outright have waned, he said, an example of the improving state of economic affairs, with bits of good news playing counterpoint to the miserable overall situation.

"The downturn is still intense, but it's no longer intensifying," he said. "The economy continues to contract, but at a much slower rate. And there are some rays of sunshine, some signs of stability appearing."

Never before have so many learned so much about how important changes to the "second derivative" are. That is, where a slowing rate of decline is viewed as the natural precursor to an outright change in direction, which it may or may not be.