Summers and the 'inventory cycle'

He was just on CNBC making a pretty big deal about the inventory cycle being one of the keys to economic recovery in the coming months. The theory being that inventories are declining and consumption bottoming, so eventually businesses will need to crank up production to meet consumer demand. This is all pretty standard thinking

But I wonder if he's really willing to admit (or, more disturbingly, foresee) the very real possibility that US consumption will never again return to pre-recession norms.

Looking at the usual suspects like inventory cycles to predict future economic events assumes that nothing will have really changed once the worst of this is (seemingly) behind us. Couldn't be further from the truth, imho

As has been mentioned here before:

1. Consumers will have dramatically reduced access to credit. They will not be able to borrow.
2. Consumers have lost $12Trillion in net worth, and counting. They desire to save, and we'll get back to an 8-10% national savings rate, probably pretty fast.
3. Newer, younger consumers will not behave like Boomers. They seek sustainable consumption
4. Older consumers are freaked about retirement. They will invest and spend extremely cautiously
5. Health care and education aren't getting any cheaper anytime soon....
6. Everyone will suffer from double-digit unemployment well into 2011, and the fear thereof looms large. They will look for security, not consumption.

This is not your garden variety recession folks, and garden variety analyses of 'recovery' are not operational.

Summers' boss got it at the G-20: Obama: The American "voracious consumer market" has ended But it seems I was wrong about Larry being the catalyst.