No more overreliance on consumer spending: Volcker

NAPLES, Florida (Reuters) - White House economic adviser Paul Volcker said his meeting on Monday with President Barack Obama focused in part on reducing U.S. economic reliance on consumer spending.

Paul Volcker, chairman of the Economic Recovery Advisory Board, speaks at the John F. Kennedy School of Government at Harvard University in Cambridge, Massachusetts October 15, 2009. REUTERS/Brian Snyder

The alternatives to help bolster future economic growth include boosting exports, applying innovative technology to green issues and improving the nation’s infrastructure, Volcker said.

The former Federal Reserve chairman, who now heads the White House Economic Recovery Advisory Board, said Obama understands that “We cannot have so much consumption.”

Consumer spending accounted for 70 percent of the U.S. economy before last year’s economic meltdown, a level that Volcker said was sustained only by “the magic of financial engineering.”

“We cannot rebuild the economy to the tune of 70 percent consumption or housing booms. It will just break down again,” Volcker said.

He spoke at a global financial conference in Florida sponsored by the CME Group derivatives market.

Volcker said Monday’s meeting of the advisory board with Obama looked at ways to boost the economy through specific projects such as reducing energy consumption by retrofitting buildings to be more efficient.

In addition to increasing exports, the board also discussed finding private money to help rebuild a national infrastructure that is sorely in need of attention.

Obama has been accused recently of ignoring Volcker’s advice to do more to separate commercial banking from risky securities trading.

Asked who talked and who listened at Monday’s White House meeting, Volcker said, “The board members did most of the talking.”

Reporting by Jane Sutton; Editing by Jan Paschal