Former Treasury Secretary and Harvard professor Larry Summers said there is “certainly a risk” of a recession in the next year.
Appearing as a guest on CNN’s “State of the Union” Sunday, Summers, who served as Treasury Secretary under former President Bill Clinton and Director of the National Economic Council under Barack Obama, said that because inflation continues to surge and consumer sentiment continues to crater, there is a high likelihood of a recession within the next two years.
“[Current Treasury] Secretary [Janet] Yellen… said this week, ‘there is nothing to suggest a recession is in the works,'” Bash began. “Do you agree with that?” she asked.
“No, I don’t,” Summers said flatly.
“You think a recession is in the works?” Bash followed up.
“I think when inflation is as high as it is right now, and unemployment is as low as it is right now, it’s almost always been followed within two years by [recession],” Summers responded. “I look at what’s happening in the stock and bond markets, I look at where consumer sentiment is. I think there is certainly a risk of recession in the next year. And I think given where we’ve gotten to, it’s more likely than not that we’ll have a recession within the next two years. That is something we can manage. We’ve had them for the whole history of the country. We need to be prepared and to respond quickly if and when it happens, but I think the optimists were wrong a year ago in saying we’d have no inflation. And I think they’re wrong now, if anyone’s highly confident that we’re going to avoid recession.”
“It’s more likely than not we’ll have a recession within the next two years.”
Former Treasury Secretary @LHSummers tells @DanaBashCNN why he disagrees with current Treasury Secretary Janet Yellen’s projection that a recession is not on the horizon. @CNNSotu #CNNSOTU pic.twitter.com/gzrR3B6TBy
— CNN (@CNN) June 12, 2022
Yellen made the comments earlier this week at a policy forum in Washington, D.C., in response to a tweet from rapper Cardi B that asked, “[w]hen y’all think they going to announce that we going into a recession?”
“Don’t look to me to announce it,” Yellen said. “I’m not going to announce it. I don’t think we’re going to have a recession.”
“We have a very strong economy. I know people are very upset — and rightfully so — about inflation. But there’s nothing to suggest…that a recession is in the works,” she added.
Meanwhile, inflation soared 8.6% annually in May, breaking yet another 40-year high, while the University of Michigan’s Consumer Sentiment Index fell to 50.4, a 14% decline and the lowest number on record.