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As we enter a new earnings season, many market watchers are cautiously optimistic about the state of the U.S. economy and its recovery.Yet some, including former Obama White House economic adviser Larry Summers, worry that the recovery is not happening fast enough.

"When the economy goes down there is less capital investment, some people who lose their jobs and never come back to working, some young people never get on the track that they hope to," Summers told Marketplace. "So the temporary blemish of a downturn leaves a permanent scar."

Glenn Hubbard, who was Chair of the White House Economic Council of Advisers under President George W. Bush, joined Marketplace Morning Report host Jeremy Hobson to discuss the economy and where its headed from his point of view.

On why stocks are booming despite a tepid job and housing market:

Hubbard: "It's a complicated picture in the economy. I expect first quarter GDP growth to actually be relatively healthy. The economy has some underlying momentum in it, particularly coming from the housing sector and durable goods. But there is a lot of uncertainty in the economy, principally from public policy, and that really holds back the job market and long-term investments."

On his advice for Washington lawmakers:

Hubbard: "The first thing would be to reduce uncertainty by agreeing on gradual deficit reductions. Unfortunately the debate in Washinton and in Europe tends to be about austerity today -- that's not really the issue. The issue is gradual spending restraint, principally in entitlement programs. It needs to be fair -- let's do the entitlement adjustments progressively, slow down Social Security growth and/or Medical subsidy growth for more affluent people.

To hear more from Glenn Hubbard on tax increases, entitlement reform and the deficit, click on the audio player above.

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Follow Jeremy Hobson at @jeremyhobson