Larry Summers On The Economy: "What Started As A Financial Problem Is Becoming A Structural One"

From The Financial Times, "The world is stuck in a vicious cycle" by Lawrence Summers:

In much of the industrial world, what started as a financial problem is becoming a structural one. If growth in the US and Europe had been maintained at its average rate from 1990 to 2007, gross domestic product would have been between 10 and 15 per cent higher today and more than 15 per cent higher by 2015 on credible projections. Of course, this calculation may be misleading because global GDP in 2007 was inflated by the same factors that created financial bubbles. However, even if GDP was artificially inflated by 5 percentage points in 2007, output is still about $1tn short of what could have been expected in the US and EU. This works out to more than $12,000 for the average family.

Summers, the Charles W. Eliot University Professor at Harvard University's Kennedy School of Government, served as the Director of the White House United States National Economic Council for President Barack Obama until November 2010, and the United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton.

[HT: Greg Mankiw]