Treasury Secretary Janet Yellen said last week that there is no indication that a recession is looming — but former Treasury Secretary Lawrence Summers disagrees.
“I think when inflation is as high as it is right now,” while “unemployment is as low as it is right now, it’s almost always been followed within two years … by recession,” Summers said during an interview on CNN’s “State of the Union.”
“I look at what’s happening in the stock and bond markets. I look at where consumer sentiment is. I think there’s certainly a risk of recession in the next year. 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,” he said.
Americans have been getting slammed by soaring inflation.
“Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment,” the Bureau of Labor Statistics noted in a consumer price index report released on Friday. “The all items index increased 8.6 percent for the 12 months ending May, the largest 12-month increase since the period ending December 1981.”
As of Monday, the AAA national average price for a gallon of regular gas has hit a whopping $5.014 per gallon.
President Joe Biden has been saying that combatting inflation is his number one “economic priority.”
The stock market plunged on Monday, with the S&P 500 falling 3.88%, the Dow Jones Industrial Average declining 2.79%, and the Nasdaq Composite losing 4.68%.
“I think the banana Republicans who are saying that what happened on January 6th was nothing or OK, are undermining the basic credibility of our country’s institutions, and that in turn feeds through, uh, for inflation, because if you can’t trust the country’s government, why should you trust, uh, its money?” Summers said.
Summers’ tenure as Treasury secretary occurred during a portion of President Bill Clinton’s time in office — Summers also spent time serving as the director of the National Economic Council during a portion of President Barack Obama’s tenure.