Summers notes strength U.S. now healthiest it's been in years, Treasury deputy says

The economy

December 09, 1997|By BLOOMBERG NEWS

WASHINGTON -- The U.S. economy is the strongest it's been in several generations, thanks in part to an expansion that has relied on investment, exports and a commitment to reducing the federal deficit, Deputy Treasury Secretary Lawrence Summers said yesterday.

"When I look around me today, I see an economy that is as strong as it has been in generations," Summers said in a speech to a national electricity forum sponsored by the Department of Energy. That expansion is healthy, he said, because it's been built on investment and exports and on "sound macroeconomic policy."

Summers called for deregulating the electricity industry, which by 2010 could save the U.S. government up to $20 billion a year that could go toward tax reduction and further investments -- indirectly helping the U.S. economy and spurring further growth.

Summers reiterated that under President Clinton the federal deficit was cut to $22.6 billion in 1997, the lowest since 1974. "The deficit reduction we have achieved has freed up more than a trillion [dollars] in capital that otherwise would have gone into the sterile asset of government bonds."

He also credited the Federal Reserve for the stability of the U.S. economy and the length of this expansion. "Continuing vigilance by Chairman Alan Greenspan and the Fed have helped keep inflation in check, not only at the supermarket checkout counter but at the factory gate."

Summers also said the U.S. economy is proving that it's more adaptable to an era dominated by financial markets. "The 1990s are the first decade when the U.S. will grow faster than Japan or Germany," Summers said. "The story of the postwar era has been one of convergence, but that decades-old story of convergence is over and the U.S. is pulling ahead," he said.

Pub Date: 12/09/97

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