REUTERS/Jonathan Ernst
He laid out four pieces of evidence for where his fear comes from:
- The recovery has been slow in the U.S. and even slower in the rest of the world.
- Even during the housing bubble, loose money and reduced credit standards only created moderate growth.
- Interest rates are up against the zero-lower bound and real rates may be unable to go low enough to get back to full employment.
- Falling prices could lead to deflation.
However, Summers is quick to point out that these four data points do not mean that we have entered a period of secular stagnation. They simply are reasons to be concerned.
"Today, secular stagnation should be viewed as a contingency to be insured against - not a fate to which we ought to be resigned," he writes.