Larry Summers says the US WILL have a recession and gas prices will keep going up
Obama’s top economic adviser Larry Summers says a recession WILL come and gas prices will continue to rise after Treasury Secretary Janet Yellen urged the economy to recover
- “There is no indication that a recession is in the offing,” Yellen said at a New York Times economic forum last week.
- When asked if he thought Yellen was right about CNN’s State of the Union Sunday, Summers replied, “No.”
- “I think when inflation is as high as it is now and unemployment as low as it is now, it is almost always followed by a recession within two years.”
- In a veiled stance to Yellen and other economists, he said: “I think the optimists were wrong a year ago in saying we don’t have inflation and I think they are wrong now.”
Top Clinton-era economic adviser to Obama and Treasury Sec. Larry Summers said he thought Treasury Sec. Janet Yellen is wrong when she says there is “no indication” that the US is going into recession.
“There is no indication that a recession is in the offing,” Yellen said at a New York Times economic forum last week.
When asked if he thought Yellen was right about CNN’s State of the Union Sunday, Summers replied, “No.”
“I think when inflation is as high as it is now and unemployment as low as it is now, it is almost always followed by a recession within two years,” he added.
“I’m looking at what’s happening in the stock and bond markets, I’m looking at consumer confidence, I think there’s definitely a risk of a recession in the coming year and I think given where we are, it’s more likely that we will have a recession for the next two years,” the Democratic economic adviser said.
In a veiled jab to Yellen and other Biden economists, he said: “I think the optimists were wrong a year ago in saying we don’t have inflation and I think they are wrong now. ‘
“The Fed’s forecasts were usually far too optimistic. I hope they will fully see the gravity of the problem in their forecasts when they meet this week.”
Federal Reserve Chair Jerome Powell and Yellen insisted inflation would be “transient” for much of 2021, and since then the Fed has been criticized for waiting too long to tighten monetary policy and raise it. of interest rates that are close to zero.
As of Monday, the national average cost for a gallon of gas is $5.01, surpassing $5 for the first time in history, and inflation hit a 41-year high of 8.6 percent in May, according to the most recently available data. data from the Labor Department. last week.
Larry Summers said he thought Treasury Sec. Janet Yellen is wrong when she says there is ‘nothing to indicate’ that the US will slip into recession
In a veiled jab at Treasury Sec. Janet Yellen and other Biden economists, Summers said: ‘I think the optimists were wrong a year ago in saying we don’t have inflation and I think they are wrong now’
Meanwhile, the cost of groceries rose 11.9 percent from this time last year, the strongest increase the country has seen since Jimmy Carter took office.
But Summers radiated optimism: “We can handle that. We’ve had them throughout the country’s history. We have to be prepared and react quickly if and when it happens.”
He also claimed that President Biden can do “not much” about gas prices, blaming them for geopolitical developments in Ukraine, saying it is “hypocrisy in the extreme” when people argue that the US should support Ukraine, but then blame Biden for high gas prices.
The new data suggested the Federal Reserve could continue its rapid rate hikes to fight inflation through September, after already raising rates by 75 basis points since March.
The Federal Reserve is meeting for two days next week and most economists and analysts expect the central bank to raise its key lending rate by another half point.
It already raised that rate by half a point on May 4, its most aggressive move since 2000 and double its usual amount.
Another hike is planned for September, possibly due to the double hike in July, and the central bank will also end its bond-buying program next month.
It is part of a growing global tide as central banks remove the ultra-low interest rates that supported borrowing during the pandemic, economic growth and stock prices, and also flooded the markets with investments seeking higher returns.
Now central banks are focusing on slowing growth to control inflation.
The risk is that such moves could trigger a recession if they are too aggressive, and higher interest rates tend to pull stock prices lower.