Former Treasury Secretary Larry Summers cast doubt on President Biden’s comments that he is hoping for an economic “soft landing” to get inflation under control without triggering a recession, saying that he believes achieving that goal is “really quite unlikely.”
Summers told The Washington Post in an interview published Friday that he expects unemployment to rise and a recession to occur. He said declines in inflation from around 7 percent to 2 percent, the Federal Reserve’s goal for annual increase in the consumer price index, have rarely happened in U.S. history without “meaningful downturns.”
The former Clinton administration Cabinet member was responding to comments Biden made during an interview with CBS’s “60 Minutes” earlier this month.
Summers said the economy is “in many respects” stronger than when Biden was running for president in 2020, and he could see a future where a “quite significant” recession happens, but employment and gross domestic product are still stronger than during the last presidential election.
The Fed has raised interest rates by three quarters of a percentage point three times in a row, most recently earlier this month. Chairman Jerome Powell has indicated a willingness to raise interest rates as much as necessary to get inflation to steadily drop even as it could lead to a recession.
A recession is unofficially defined as two consecutive quarters of GDP decline, which occurred last quarter, but whether the economy is in a recession depends on whom is being asked.
Summers said the economy has been somewhat stronger over the past three months than he would have expected, reducing the chances of a recession by the end of the year. But he said the stock market’s decline and the Fed’s increase of interest rates also raises the chances.