I am late to this, but as those who have been covering the horserace for the chairmanship of the Federal Reserve already know, Larry Summers has taken himself out of the running. Sarah Binder makes some good points regarding the rise and fall of Summers' prospects as a candidate for the chairmanship. You should read her entire post, but the following especially caught my eye:

The White House allowed the Summers nomination to twist in the wind publicly for too long, and by not actually nominating Summers, the White House "left his opponents in control of the confirmation contest." Assuming that the conventional wisdom is true and that the president wanted Summers all along, this is an especially cruel way to treat someone who was a member of the Obama administration, and who was the president's first choice for the position of chairman of the Federal Reserve.
Quite obviously, this is a big win for the liberal wing of the Democratic party, which took the lead in sinking the Summers nomination.
I agree with Binder that Federal Reserve nominations will become a whole lot less acrimonious when the economy finally starts humming along.

Paradoxically, of course, those who worked to sink the Summers nomination in order to get the president to nominate Janet Yellen instead might have done her candidacy some harm as well. The president may not like being seen as capitulating to the demands of the liberal wing of his party; it would make him look weak, after all. I think that Yellen is the frontrunner now, but it would not surprise me if Barack Obama chose a different candidate in order to signal to liberals that he cannot be pushed around.

Edward Luce argues that Summers and Yellen were not as far apart on the issues as Summers' opponents liked to claim that they were. Of course, policy similarities and differences are in the eye of the beholder to a very large extent, but this is worth noting nonetheless.

So sayeth the UCLA Anderson Forecast. It is hard to disagree with its findings, which are written in admirably candid fashion:

The expected U.S. "Great Recovery" hasn't materialized and the economy has fallen short of even normal growth, according to a forecast released Wednesday.

The second-quarter UCLA Anderson Forecast said the growth of real gross domestic product - meaning the inflation-adjusted value of goods and services produced - is too small to help the nation climb out of its slump.

The figure was 15.4 percent below a "normal" growth trend, forecast director Edward Leamer wrote.

"To get back to that 3 percent trend, we would need 4 percent growth for 15 years, or 5 percent growth for eight years, or 6 percent growth for five years, not the disappointing twos and threes we have been racking up recently," he said.

"It's not a recovery. It's not even normal growth. It's bad," he wrote.

A real GDP growth rate of just 1.9 percent is expected for this year, only rising to 3 percent in 2015, according to the forecast.

[. . .]

Unemployment should fall to 6.9 percent next year and 6.6 percent by 2015, according to the forecast - partly due, however, to discouraged workers dropping out of the labor force.

Leamer said that while jobs are being created, "the tepid growth continues to obscure the nation's most fundamental problems: too much government spending funded with too much borrowing, too little national savings to cover late-in-life health care issues and too many workers lacking the skills to compete in the modern economy," according to a University of California, Los Angeles press statement.

In addition, the jobs being created may not provide workers with a secure future and the education system is failing to provide skills such as analytical thinking that will be crucial for future workers, he wrote.

"Regrettably we reward teachers if their students can regurgitate the information on standardized tests," Leamer wrote.

About the only good news contained in the report is that the housing market appears to be further recovering. But the rest of the news is bad, and the commentary on education policy failings is entirely apt. Recall that during his re-election campaign, President Obama told us that things were definitely looking up when it came to the economy. I wonder if he will be made to take back those words. Perhaps the national media, which is supposed to hold public officials to account, might want to get on the president's case regarding the rhetorical puffery he used to try to convince us that all is well with the economy.

In the meantime, James Pethokoukis admirably pushes back against the notion that we need to have a tighter Federal Reserve. I can't believe that this issue is actually being discussed. Inflation will be a threat down the line if we do not get fiscal policy under control, but it is not a threat now, or in the near future. And the economy could use all the help that it can get from an expansionary monetary policy.