As Americans continue to feel the sting of inflation-driven high prices on everyday goods and services, there are growing concerns that America could soon face the dreaded “R-word,” — a recession.
As Bloomberg reported, ex-Treasury Secretary Larry Summers, who served under former President Barack Obama, warned CNN viewers on Sunday’s State of the Union that the United States will more than likely experience a recession within the next two years.
CNN’s Dana Bash questioned Summers directly on this thoughts regarding the possibility.
“Secretary Yellen, who has the job you once had, said this week, quote, there is nothing to suggest a recession is in the works. do you agree with that?” Bash asked.
Summers immediately responded, “No, I don’t,” before explaining why he sees quite a different picture for the next few years in America.
“I think when inflation is as high as it is right now, and unemployment is as low as it is right now, it’s almost always been followed within two years by recession. I look at what’s happening in the stock and bond markets. I look at where consumer sentiment is. I think there is certainly a risk of recession in the next year,” Summers began.
He added: “And I think given where we’ve gotten to. It’s more likely than not that we’ll have a recession within the next two years. That is something we can manage. We’ve had them for the whole history of the country.”
“We need to be prepared and to respond quickly if and when it happens. I think the optimists were wrong a year ago in saying we’d have no inflation, and I think they’re wrong now,” the former secretary concluded.
As the New York Post noted, Summers’ warning comes in the wake of an uptick in the Consumer Price Index (CPI), jumping from 8.3% to 8.6%, when just a few days before, analysts predicted a strong possibility of that number moving downward.
The latest numbers set a record 40-year high.
Summers opined on his outlook on the inflation issue as well, making clear in no uncertain terms that he believes it hasn’t yet peaked.
“There’s a risk that it will rise higher and I don’t think it’s likely to fall back very, very rapidly. I think the Fed’s forecasts have tended to be much too optimistic there and I hope they’ll recognize fully the gravity of the problem in their forecasts when they meet this week,” Summers said.