America’s economy is likely to continue shrinking “for some time to come”, Larry Summers, the director of the White House National Economic Council, warned yesterday, predicting further rises in unemployment.

Download the new Independent Premium app Sharing the full story, not just the headlines

Mr Summers said that while he expected the pace of the collapse of the US economy to slow – and for manufacturing activity, in particular – to pick up eventually, the recovery would not begin to materialise for some time – possibly another six months or so.

"I expect the economy will continue to decline," Mr Summers said in an interview on Fox News, predicting "sharp declines in employment for quite some time this year."

He added that the US was now "on a path towards containment and towards building a path toward expansion”.

“Even sharp plans take time," he said, adding that further work on stabilising the global banking system was also necessary.