April 20 (Bloomberg) -- Nobel Prize-winning economist Michael Spence said he doesn’t expect every bank to pass stress tests run by the U.S. government to assess their financial health.

Spence said in an interview with Bloomberg Television he would be “very surprised” if all the banks pass the exam, which he says will probably give a better picture of the banks’ health than earnings statements. He also said that “the data on lending and credit are still not that encouraging.”

The U.S. government on May 4 is scheduled to release results of stress tests that aim to measure whether 19 companies, including Citigroup Inc., Bank of America Corp., GMAC LLC and MetLife Inc., have enough capital to weather a deeper economic downturn. The Federal Reserve and other regulators aim to publish the methodology behind the assessments on April 24.

There has been “significant progress” in capital earnings compared with two months ago, Spence said. “Significant policy intervention from the Federal Reserve, the Treasury response in the capital market regarding asset prices, is feeding into bigger confidence in the real economy.”

Banks are paring lending to repair balance sheets damaged by the more than $1 trillion in losses and writedowns worldwide in the global financial crisis. U.S. consumer credit increased the least since December 1992 in the 12 months ended February.

Emanuel, Summers

Government officials said yesterday that the Obama administration will avoid asking Congress for new funds to bolster banks.

White House chief of staff Rahm Emanuel, speaking on ABC’s “This Week” program, said that while he had not seen results of the tests, he believed “we won’t” have to get more money from Congress. Aide Lawrence Summers, interviewed on NBC’s “Meet the Press,” said “the first resort for more capital is going to the private markets.”

President Barack Obama said at a press conference yesterday he’ll demand “accountability” from any U.S. banks that require additional taxpayer money following the stress tests.

The U.S. economy will also change in the next few years, Spence said. “There’s no question we’re going to have a new normal,” he said. “It’s going to have a higher savings rate, closer to a match with the investment rate. We’ll probably have a period where the cost of capital is higher because leverage is lower, and I think our growth will be somewhat diminished.”

More Savings

The savings rate in the U.S. has jumped in recent months as consumers, wary of losing their jobs, limited spending. The rate was 4.2 percent in February, according to Commerce Department data. As recently as August, it was 0.8 percent.

Consumer spending, which accounts for about 70 percent of the economy, fell at a 4.3 percent pace in the fourth quarter, marking the first back-to-back decreases in excess of 3 percent since record-keeping began in 1947. Economists surveyed by Bloomberg News earlier this month forecast consumer spending will falter this quarter, following a spurt the first three months of the year, and only recover gradually toward the end of 2009.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

Last Updated: April 20, 2009 13:05 EDT