![]() “We’ve all had the experience of taking a course of drugs and giving up, stopping the drugs, before the course was exhausted, simply because we felt better. The economist also used one of his favorite analogies to describe his fears of entrenched inflation, comparing the Fed’s interest rate hikes to a form of antibiotics for the economy, where the full prescription must be taken for the effects to last. “I think the economy is going to slow and inflation is going to come down…but I still think the risks are very large that we either don’t get inflation down durably or the economy tips into recession.” ![]() “It’s going to be a very difficult balancing act,” he argued. But Summers, who over the past few years stood firmly against the Federal Reserve’s “ transitory” argument-that inflation was a temporary issue caused mainly by broken supply-chains amid COVID-related lockdowns-said that getting inflation all the way back to the Fed’s 2% target remains a challenge. And year-over-year inflation, as measured by the consumer price index, dropped from its 9.1% June peak to 6.5% in December.įederal Reserve Chair Jerome Powell said last week that the latest data is indicative of “ disinflation” in some key segments of the economy. economy added 517,000 jobs in January, pushing the unemployment rate to a 53-year low of 3.4%. ![]() “I’m not predicting with confidence that that will happen, but I think the risks are significantly elevated.” Coyote moment where these things all come together and it’s like walking off a ledge sometime in the middle or latter part of this year,” Summers told Boston’s NPR news station WBUR Wednesday, referencing the classic Looney Tunes character known for his not-so-successful attempts at catching the Road Runner. “I think the economy is vulnerable to a Wile E.
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