Bill Clinton’s Treasury Secretary Sunday predicted the U.S. economy will enter a recession by the end of 2023 from pent-up demand.
Lawrence Summers became president of Harvard University after leaving the Clinton administration. He returned to the White House as Director of the National Economic Counsel for former President Barack Obama. Summers was a contender to chair the Federal Reserve after Ben Bernanke left but Obama ended up selecting Janet Yellen.
The former Treasury secretary told Chuck Todd on NBC’s “Meet the Press” that a recession is almost inevitable. That opinion contradicts the talking points trotted out by President Joe Biden and administration officials recently.
“Can inflation be tamed at this point without a recession,” Todd asked Summers, who said he doubts it.
“I don’t think there are historical precedents for inflation, at the rates we now have, coming down to the target of two percent the Fed has set without a recession,” Summers responded.
“I think all the precedents point to a recession, Chuck,” said Summers before noting there is always a first time for everything. The respected economist said he arrived at his conclusion after considering a wide range of indicators.
Harvard’s professor emeritus points to what’s happened in the stock markets, the relative rates of interest rates at different durations and surveys of consumer expectations. Summers added the simple fact that what drives inflation is supply and demand.
“Supply doesn’t change that fast,” Summers said, “and, so mostly what you need to do to reduce inflation is reduce demand. That is a very hard process to control and so it usually leads to recession.”
“All of that tells me the dominant probability would be that by the end of next year we would be seeing a recession in the American economy.”
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