Harvard Prof., Former IMF Economist Rogoff: Window for Soft Landing ‘Narrowing’ ‘Particularly’ After November Jobs Numbers

On Tuesday’s broadcast of CNN’s “Early Start,” Professor of Economics at Harvard University and former International Monetary Fund Chief Economist Ken Rogoff said “the odds are very high” that the U.S. economy will go into a recession, we should expect rate hikes “to keep up for longer than anyone was hoping” a couple of months ago, and the window for avoiding a recession while bringing down inflation is getting narrower, especially after last week’s jobs numbers.

Rogoff said there have been “monster interest rate increases. We just haven’t seen anything like this in many decades. But it is going to slow down, but they’re at a high level. They’re headed higher. And I think, particularly because of the strong wage gains — which is good, but it’s going to radiate out into inflation — we can expect this to keep up for longer than anyone was hoping maybe a couple of months ago.”

Host Christine Romans later asked, “I’m wondering, if you had to complete the sentence, ‘The U.S. economy is X,’ how would you complete that sentence?”

Rogoff responded, “Headed towards recession. I think the odds are very high. The economy’s very strong, but it’s unsustainable. The inflation’s too high. The Fed’s going to keep raising interest rates. And you mentioned China earlier, looking at what’s going on in Europe. The whole world’s sinking into recession. It’s hard for us to stay out of it.”

He added that a soft landing is “a narrow possibility. I mean, it’s very hard to know what’s going to come around the corner. We’ve never seen anything like this. Yes, it could happen. But I think the window is narrowing, and particularly, after last week’s wage gains, you’ve seen the markets react very negatively, not just because they think interest rates are going up, but they think a recession’s really coming. Some of the longer-term interest rates have started falling sharply because they think, eventually, at the other end of this, the Federal Reserve’s not going to be raising rates, but they’re going to be cutting them.”

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