Former Treasury Secretary Larry Summers, whose out-of-consensus views about the risks of persistent inflation have come true, is reiterating his concerns about a potential U.S. downturn: He now says a recession is “the most likely thing” partly because the Federal Reserve “is going to have to keep going [in its effort to subdue inflation] until we see disinflation.”
In an interview with Bloomberg Economics released on Thursday, Summers, a paid contributor to Bloomberg, said that “the odds on a hard landing within the next two years are certainly better than half, and quite possibly two-thirds or more.” One of the mechanisms that will bring about a recession is the central bank’s response to elevated inflation, Summers said, adding that “we’re not going to see disinflation back toward the target range until we see unemployment rise, meaningfully.”