Former Treasury Secretary Larry Summers said on Sunday that a recession is likely in the next year or two.
Summers said he disagreed with current Treasury Secretary Janet Yellen that a recession is not “in the works.”
Yellen on Thursday dismissed concerns of an impending recession as the Federal Reserve looks to increase interest rates, which makes the cost of borrowing more expensive, while trying to avoid a major economic downturn.
“I think there’s certainly a risk of recession in the next year,” Summers told CNN “State of the Union” co-anchor Dana Bash.
“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 continued.
Summers, who served as Treasury secretary under former President Clinton and later as director of the National Economic Council under former President Obama, has become a favorite among conservatives for breaking from the Democratic Party line in his extensive comments on the status of the economic recovery.
Yellen and other Biden administration officials, who have pointed to low unemployment and large job gains since President Biden took office, have come under fire after previously describing inflation as transitory and a small risk.
Summers in May 2021 warned about “very substantial risks on the inflation side” and characterized Biden’s fiscal stimulus as “rather overdoing it,” a concern he reiterated on Sunday.
Annual inflation hit 8.6 percent in the 12-month stretch ending this May, the fastest yearly price growth since 1981.
When asked by Bash if the inflation rate could go higher, Summers said it depends on the actions of Russian President Vladimir Putin and fallouts on oil prices.
“I don’t think it’s likely to fall back very, very rapidly,” Summers said. “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.”
He added that those geopolitical issues are driving inflationary pressures, and there’s “not a lot” Biden can do to bring down gas prices. Gas prices hit a record high on Sunday, climbing to a national average of $5 for a gallon of gas.
“It’s hypocrisy in the extreme when people say we need to stand strongly with Ukraine and then blame the administration for the fact that gas prices are higher than they were a year ago,” Summers said on CNN. “I’ve been disappointed by some of the almost demagogic statements that have been made in that regard.”