Larry Summers: The Economy is Still On a Sugar High

Larry Summers, Treasury Secretary from 1999 to 2001 under President Bill Clinton and an economic adviser to President Barack Obama from 2009 through 2010, writes for The Washington Post:

The approaching end of President Trump’s first year in office, another strong employment report and a still-strong stock market make it appropriate to revisit my year-old judgment that the economy is enjoying a “sugar high.” Unfortunately, the best available evidence suggests that signs of current market and economic strength are largely unrelated to government policy, that the drivers of this year’s economic strength are likely transient and that the structural foundation of the U.S. economy is weakening. Sugar high remains the right diagnosis...

Of course, I do not believe that Summers would identify the "sugar high" as a direct result of Federal Reserve manipulation of the money supply but that is exactly what is keeping the boom going.

It won't last but in the very near future, although the stock market looks vulnerable, there appears no immediate threat to the current overall structure of production of the economy.

  -RW