Summers: Inflation Above 4% ‘Pretty Securely Built in’ 

During an interview aired on Friday’s edition of Bloomberg’s “Wall Street Week,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that there is “really no evidence of a significant decline” in inflation and “inflation above 4% looks to be pretty securely built in.”

Summers stated, “Looks like inflation is running at a pretty stable rate. It’s still 2.5 points at least above where it was before this whole episode started. It depends on just how you look at the figures. But really no evidence of a significant decline. If you look at the private sector and you take out benefits, then it’s going up a bit. If you look at the 12-month figure, it’s going up a bit. Those may be the wrong things to do. So, it may be better to look at the overall figure. But I think it’s showing what I’ve been saying for quite some time now, which is that we are in [an] ingrained moderate to high inflation economy. Nothing like 9% inflation is built in, but inflation above 4% looks to be pretty securely built in. And if productivity growth doesn’t accelerate, it could be worse than that quite easily. So, I’m pretty uncomfortable with the current situation. And I think it just points to the difficulties that the Fed is facing going forward and confirms the broad diagnosis that we have an overheated economy that’s not going to fix itself. And therefore, we’re not likely to get out of this excess inflation situation without having a recession.”

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