Summers: U.S. economic recovery on track

By Caren Bohan and Jeff Mason

WASHINGTON (Reuters) - The U.S. economy is firmly poised for a recovery from its deep recession but growth may be moderate and the job market will not revive immediately, senior White House aide Lawrence Summers predicted on Wednesday.

"There's really no doubt that the third quarter registered growth, and growth at a nontrivial rate, and every expectation that the fourth quarter will do the same," Summers said in an interview as part of the Reuters Washington Summit.

Summers, who heads the White House's National Economic Council, also gave strong backing to the beleaguered U.S. dollar, which has fallen to a 14-month low against major currencies.

He said he did not think the dollar's status as a global reserve currency was in jeopardy.

"I think the dollar ... is going to be the world's primary reserve currency for ... the foreseeable future," Summers said. "I think the most important thing we can do for the dollar is make sure that it rests on strong fundamentals."

On the economy, Summers said the $787 billion stimulus package and inventory rebuilding by businesses were among the "dominant drivers" lifting the economy.

But he said considerable slack remained in the economy and job growth would lag behind the broader economic recovery.

"It will be some time before unemployment starts to decline. Once it declines it will take a long time to return to normal levels, given how elevated it is," he said.

The jobless rate is now at a 26-year-high of 9.8 percent.

"The question of what will propel growth throughout the expansion is still a crucial one," Summers added. "But that's always the case at the beginning of expansions."

Most private economists think the recession, which began in December 2007, ended in the third quarter. But there is much disagreement about the path of recovery.

Some see above-average growth continuing through next year, arguing that deep recessions are typically followed by powerful recoveries, helped along by pent-up demand as consumers and companies resume spending.

Others worry that heavily indebted households will remain cautious in their spending, particularly with unemployment near 10 percent and likely to move higher, restraining a recovery.

CONCERNED ABOUT DEBT

It remains unclear what further steps President Barack Obama's administration may take to spur job growth.