During an interview aired on Friday’s edition of Bloomberg’s “Wall Street Week,” economist, Harvard Professor, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that stagflation is “the preponderant probability as to where we’re going to get” over the next couple of years.
Summers said, “I think it’s the most likely place we’re going to be. If stagflation means rising unemployment and still high inflation, I think that’s the preponderant probability as to where we’re going to get over the last couple of years — over the next couple of years. As I’ve said before…the painful fact that needs to inform our view is that we’ve never had a moment when unemployment was below 4%, inflation was above 4%, and we avoided recession for the next two — subsequent two years. And right now, unemployment’s well below 4% and inflation is well above 4%. Lots of people say, look, the job market is so strong, why would anyone think we’re going to have a recession? What the data show is that the lower unemployment is, the more likely it is that it’s going to turn down in subsequent months.”
Follow Ian Hanchett on Twitter @IanHanchett