Summers: ‘Growing Evidence’ of Stagnation, Still ‘Continuing Concern’ on Inflation

During an interview aired on Friday’s broadcast 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 stated that there is “growing evidence” of economic stagnation, while there are real issues around inflation, and “I don’t see inflation as on a secure path down to the 2% target unless the economy turns over a bit.”

Summers said, “I think it’s very hard to read, David, but I think I see some growing evidence of stag-, but some real continuing concern about -flation as well. And that’s a tough combination. On the stag- side, it does look like defaults are rising. It does look like the flow of credit is coming down. Headline retail sales were not strong, although the internals are less clear. So, I think you have some grounds for concern about what’s happening with real activity on a forward-looking basis, and while the CPI and the PPI numbers surprised a bit in a favorable direction, you saw one-year inflation expectations from the University of Michigan pop up, and the Atlanta Fed wage tracker — which I actually think is a better indicator of what’s happening in the labor market than the monthly average hourly earnings — that popped up a bit last month as well. So, I think we’re still looking at a very hard to read economy. I don’t see inflation as on a secure path down to the 2% target unless the economy turns over a bit.”

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