Former Treasury Secretary and National Economic Council director <a href="https://www.dailywire.com/topic/larry-summers" target="_blank" rel="noopener">Lawrence Summers</a> warned on Tuesday that the United States still has a “serious inflation problem.”
The Consumer Price Index (CPI) rose 8.3% between August 2021 and August 2022, according to a <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> released on Tuesday by the Bureau of Labor Statistics. The reading marks a decline from the 8.5% year-over-year rate seen in July and the 9.1% year-over-year rate seen in June as gasoline <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">prices</a> continue to fall, although month-over-month prices for food, shelter, and medical services continued to tick upward.
Indeed, core inflation — the price level increase for all items except for food and energy — rose by 0.6% in August, marking a faster rate of increase than July and producing a 6.3% year-over-year rate. Analysts were expecting the measure to rise 0.3%.
“Core inflation is higher this month than for the quarter, higher this quarter than last quarter, higher this half of the year than the previous one, and higher last year than the previous one,” Summers commented on social media.
Summers remarked that median inflation — an alternative metric of core inflation favored by those who once said inflation was “transitory” — rose to “its highest ever reading.” Indeed, median inflation rose from 6.3% in July 2022 to 6.7% in August 2022, according to <a href="https://www.clevelandfed.org/en/our-research/indicators-and-data/median-cpi.aspx" target="_blank" rel="noopener">data</a> from the Federal Reserve Bank of Cleveland.
Among other officials, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen once argued that rising price levels were a temporary result of demand increases that followed widespread government lockdowns. Yellen <a href="https://www.dailywire.com/news/janet-yellen-admits-she-was-wrong-about-inflation-being-small-risk" target="_blank" rel="noopener">admitted</a> earlier this year, however, that she was incorrect about transitory inflation.
&#8220;I think I was wrong then about the path that inflation would take,” Yellen said during an interview with CNN. “As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy&#8230; But we recognize that now.”
Despite the poor inflation news, President Joe Biden claimed victory on Tuesday in the “essentially flat” headline figures. “It will take more time and resolve to bring inflation down, which is why we passed the Inflation Reduction Act to lower the cost of healthcare, prescription drugs and energy,” he said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/13/statement-of-president-joe-biden-on-consumer-price-index-in-september/" target="_blank" rel="noopener">statement</a>. “And my economic plan is showing that, as we bring prices down, we are creating good paying jobs and bringing manufacturing back to America.”
Meanwhile, Summers said that the odds of inflation falling to 2% — the official long-term target of the Federal Reserve — without unemployment spiking above 4.5% is “highly implausible,” while even interest rates above 4% would be insufficient to restore normal price level increases.
The unemployment rate <a href="https://www.dailywire.com/news/unemployment-rate-edges-upward-for-the-first-time-in-months-as-more-americans-return-to-work" target="_blank" rel="noopener">increased</a> for the first time in months to 3.7% in August 2022, even as more Americans returned to work, according to <a href="https://www.bls.gov/news.release/empsit.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics. As inflation remains elevated, Powell and other policymakers still intend to bring inflation to historical levels.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell recently <a href="https://www.dailywire.com/news/jerome-powell-vows-to-restore-price-stability-even-though-federal-reserve-must-first-bring-some-pain" target="_blank" rel="noopener">said</a> at the central bank’s annual symposium in Jackson Hole, Wyoming. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.”

Former U.S. Treasury Secretary Larry Summers

‘A Serious Inflation Problem’: Top Obama Economist Sounds The Alarm Over Prices As White House Celebrates

Top Obama Economist Says Inflation Is Still A Serious Problem

Biden Administration

Economy

Inflation

Larry Summers

Daily Wire Editor Emeritus <a href="https://www.dailywire.com/topic/ben-shapiro">Ben Shapiro</a> bashed the <a href="https://www.dailywire.com/topic/biden-administration">Biden administration</a> on Friday for publicly chastising people skeptical of his <a href="https://www.dailywire.com/news/breaking-biden-announces-details-of-student-loan-cancellation-plan">plan to unilaterally forgive</a> student debt.
President Joe Biden’s plan, announced Wednesday, would forgive up to $10,000 in federal student loan debt for borrowers who make under $125,000 a year — and up to $20,000 for some low-income borrowers. But as many remain skeptical, the Biden administration has taken to accusing GOP lawmakers who took out Paycheck Protection Program loans — which were designed to keep businesses afloat during forced government shutdowns and be forgiven — of hypocrisy.
“Many businesses took that money. They took that money not out of greed, but because the government had shut down their businesses,” Shapiro said. “They took that money because the government was begging these businesses to keep their employees afloat.”
“This is morally reprehensible; it&#8217;s disgusting,” said Shapiro in a monologue Friday. “If you are a business owner who just wants to operate and keep your employees employed, the government will shut you down, they&#8217;ll destroy you financially, they&#8217;ll promise you help, and then two years later, they&#8217;ll destroy you reputationally. They’ll tell you that you’re a good person for ensuring your employees can support their families, and then two years later, they&#8217;ll use that as leverage to force you to support their politically driven plan to bail out their favored political constituencies.”
Biden’s plan has also been criticized in mainstream Democratic circles, including the <a href="https://www.dailywire.com/news/wapo-editorial-board-slams-biden-for-inflationary-regressive-ill-conceived-student-loan-cancelation">Washington Post’s editorial board</a> and former Treasury Secretary <a href="https://www.dailywire.com/news/top-democrat-economists-blast-bidens-student-loan-bailout-pours-gasoline-on-the-inflationary-fire">Lawrence Summers</a>. Last year, <a href="https://www.dailywire.com/news/pelosi-shoots-down-schumers-student-debt-plea-to-biden-he-does-not-have-that-power">House Speaker Nancy Pelosi</a> (D-CA) was also skeptical of unilateral plans to cancel student loans, explaining to reporters that Biden didn’t have that kind of power.
Nixing $10,000 of student loan debt per borrower would cost $298 billion in 2022 and a total of $329 billion by 2031 if the policy is renewed each year, according to a nonpartisan <a href="https://www.dailywire.com/news/bidens-student-loan-cancellation-would-cost-330-billion-and-largely-help-the-wealthy">analysis</a> from the University of Pennsylvania’s Wharton School. A report from the <a href="https://www.brookings.edu/research/student-loan-forgiveness-is-regressive-whether-measured-by-income-education-or-wealth/">Brookings Institution</a> observed that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owned by the bottom 20% — likely because graduate degrees are <a href="https://www.dailywire.com/news/schumer-slams-fat-cats-who-dont-want-to-cancel-student-loans">often necessary</a> for the most lucrative professions.
“Democrats believe that everyone should be able to follow their passion on your dime. And so they are happy to slander you as a deadbeat for being responsible, while praising deadbeats for following their dream to become a professional finger painter. You’re the bad guy. After all, you’re the one who pays the bills. And only suckers pay their bills.”
Shapiro also noted that Biden doesn’t seem to want a legal reason for debt forgiveness, just as he didn’t need a legal excuse for past unconstitutional actions.
“Just like he didn’t need an actual legal excuse to use the Occupational Safety and Health Administration to cram down vaccine mandates on 80 million Americans before he was stopped by the Supreme Court. Just like he didn’t need an actual legal excuse to use the CDC to cram down eviction moratoria before he was stopped by the Supreme Court.”
“If you own a business, they hate you. If you paid your student loans, they hate you. If you are a responsible member of the free market economy, they hate you,” Shapiro said.
<iframe loading="lazy" title="They Hate You, and They’re Taking Your Money" width="500" height="281" src="https://www.youtube.com/embed/PhQCi6xRiSc?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

Ben Shapiro

‘Morally Reprehensible’: Ben Shapiro Bashes Biden Admin For Attacking Business Owners Who Criticized Student Loan Bailout

Ben Shapiro Bashes Biden For Going After Business Owners Criticizing Admin's Student Loan Bailout

Joe Biden

Nancy Pelosi

Paycheck Protection Program (PPP)

Student Loan Cancellation

Former Treasury Secretary and National Economic Council director <a href="https://www.dailywire.com/topic/larry-summers" target="_blank" rel="noopener">Lawrence Summers</a> warned on Monday that a plan from President <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">Joe Biden</a> to cancel thousands of dollars in <a href="https://www.dailywire.com/topic/student-loans" target="_blank" rel="noopener">student loans</a> per borrower could worsen runaway <a href="https://www.dailywire.com/topic/colleges" target="_blank" rel="noopener">college</a> tuition costs.
White House officials are leaning toward a student debt cancellation of $10,000 for each borrower earning under $125,000, according to a report from <a href="https://www.cnn.com/2022/08/22/politics/student-loan-white-house/index.html">CNN</a>. The decision looms as the White House also deliberates <a href="https://www.dailywire.com/news/nationwide-pause-on-student-loan-debt-set-to-expire-biden-officials-expected-to-update-borrowers-soon">whether to extend</a> the present moratorium on federal student loan payments, which is currently slated to expire on August 31.
Summers, a <a href="https://www.dailywire.com/news/top-obama-economist-delivers-stark-warning-about-what-is-happening-with-inflation">frequent skeptic</a> of the Biden economic agenda despite his own left-wing leanings, <a href="https://twitter.com/LHSummers/status/1561701542591356931">commented</a> on social media that the potential loan cancellation, if “unreasonably generous,” could contribute to higher levels of inflation and more colleges hiking their prices.
“Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college,” Summers explained. “Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.”
Average private university tuition is currently $43,775, and average in-state public university tuition is $11,631, according to data from <a href="https://www.usnews.com/education/best-colleges/paying-for-college/articles/2017-09-20/see-20-years-of-tuition-growth-at-national-universities">U.S. News and World Report</a>.
Data also imply that student loan cancellation fails to aid poorer Americans. A report from the <a href="https://www.brookings.edu/research/student-loan-forgiveness-is-regressive-whether-measured-by-income-education-or-wealth/">Brookings Institution</a> shows that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owned by the bottom 20% — partly because graduate degree programs are <a href="https://www.dailywire.com/news/schumer-slams-fat-cats-who-dont-want-to-cancel-student-loans">often necessary</a> for the highest-paying professions.
“The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers,” Summers noted. “If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.”
Leading Democrats have debated for the past two years about possibilities for one-time loan cancellation efforts. Beyond the Biden administration’s <a href="https://medium.com/@JoeBiden/joe-biden-outlines-new-steps-to-ease-economic-burden-on-working-people-e3e121037322">campaign promise</a> to remove $10,000 in debt per borrower, Senate Majority Leader Chuck Schumer (D-NY) has <a href="https://www.dailywire.com/news/this-cpac-footage-is-nuts-progressives-blast-pelosi-for-saying-student-debt-forgiveness-is-a-bad-idea">argued</a> that “all President Biden has to do is flick his pen” and erase up to $50,000 per borrower, with no need for legislative action.
Yet a report from the <a href="https://dailycaller.com/2022/07/12/dems-biden-student-loans-forgiveness/">Daily Caller News Foundation</a> shows that 13 Democratic members of Congress who have supported some type of federal student loan cancellation policy <a href="https://www.dailywire.com/news/democrats-who-want-to-cancel-student-debt-owe-large-amounts-themselves-report-shows">reported</a> a total of $1.5 million in loans, as indicated by financial disclosures.
Rep. Alexandria Ocasio-Cortez (D-NY) owes up to $50,000, according to the disclosures, and said at the end of last year that she owes $17,000. “I’m 32 years old now,” the lawmaker <a href="https://www.dailywire.com/news/pay-your-own-darn-bills-aoc-who-makes-174000-per-year-blasted-for-complaining-about-17k-in-student-loans">remarked</a>. “I have over $17,000 in student loan debt, and I didn’t go to graduate school because I knew that getting another degree would drown me in debt that I would never be able to surpass. This is unacceptable.”
Ahead of any national plan for student loan cancellation, the Biden administration’s Department of Education has nixed debt for students who attended defunct for-profit universities, including <a href="https://www.dailywire.com/news/bidens-education-department-releases-plan-to-cancel-student-debt-for-certain-people">Corinthian Colleges</a> and <a href="https://www.dailywire.com/news/biden-administration-cancels-4-billion-in-itt-tech-student-loans">ITT Technical Institute</a>.

‘Raises Demand And Increases Inflation’: Obama’s Top Economist Shreds Biden Plan For Student Loan Cancellation

Obama Economist Outlines Problems With Biden Student Debt Cancellation Plan

College

Student Loans

Former Treasury Secretary and Obama economic adviser <a href="https://www.dailywire.com/topic/larry-summers">Larry Summers</a> defended Democrats’ new economic package in a discussion with Sen. <a href="https://www.dailywire.com/topic/joe-manchin">Joe Manchin</a> (D-WV) days before Manchin <a href="https://www.dailywire.com/news/joe-manchin-revives-bidens-agenda-agrees-to-democrat-package-of-tax-increases-and-climate-spending">reversed</a> course and agreed to the bill, <a href="https://www.washingtonpost.com/us-policy/2022/07/27/manchin-says-he-has-reached-deal-with-democrats-economy-climate-bill/">according</a> to a report from The Washington Post.
If it passes, the new spending package would be the largest legislative climate investment the U.S. has ever made at $369 billion. The bill would also raise taxes on billion-dollar businesses and extend Affordable Care Act subsidies.
Summers was reportedly beckoned by Democratic senators earlier this week to assure Manchin that the spending package would not result in more inflation.
“The two men spoke this week, and Manchin listened as Summers talked in detail about why Democrats’ proposed economic package — including its energy provisions — would not lead to higher prices,” the Post reported.
Summers, who has <a href="https://www.dailywire.com/news/biden-claims-top-democrat-economist-larry-summers-is-not-worried-about-inflation-he-is">repeatedly warned</a> the Biden administration about inflation over the past year, <a href="https://www.politico.com/newsletters/playbook/2022/07/28/manchin-breathes-new-life-into-biden-agenda-00048415">told</a> Politico last week that he disagreed with Manchin’s concern about Democrats’ tax increases adding to inflation.
“I think the theory that all tax increases are inflationary is not a plausible or reasonable economic theory,” Summers said on Politico’s “Playbook Deep Dive” podcast. “To suggest that it is inflationary is, I think, just wrong in the same way that it was just wrong to suggest that in the short run, investing in infrastructure would somehow be deflationary.”
On Wednesday, Manchin appeared convinced that the bill, dubbed the “Inflation Reduction Act of 2022,” would not add to the country’s rising prices. He claimed that reconciling with Democrats on the package would help the country fight inflation.
Manchin’s reversal comes after he <a href="https://www.dailywire.com/news/democrat-senator-throws-another-wrench-into-bidens-agenda-biden-is-not-pleased">shot down</a> Democrat attempts at pushing through Biden’s agenda in recent weeks, and reportedly told Democratic leaders he would “unequivocally” refuse to support legislation related to climate change and tax increases.
“We must be honest about the economic reality America now faces if we want to avoid fanning the flames of inflation,” Manchin said in a statement Wednesday. “At its core, the purpose of reconciliation is to get our economic and financial house in order. Contrary to foolish talk otherwise, America cannot spend its way out of debt or out of inflation.”
Manchin’s agreement to the package he touts as an inflation-fighting bill came a day before the U.S. Bureau of Economic Analysis <a href="https://www.dailywire.com/news/u-s-in-a-recession-after-second-straight-quarter-of-negative-growth">released</a> GDP numbers for the last quarter, showing that the country is in a recession.
Democrats will use the budget reconciliation process to bypass the Senate filibuster and advance the bill along party lines, potentially giving the party a much-needed legislative victory before a midterm election where Democrats are expected to face a “red wave.”
The bill still needs to leap at least one hurdle before it stands a chance at reaching President Joe Biden’s desk as Democrats need to convince Sen. Kyrsten Sinema (D-AZ), who has voiced opposition to elements of Biden’s spending agenda. Axios <a href="https://www.axios.com/2022/07/28/sinema-manchin-deal-senate-democrats">reported</a> that hours after Manchin’s surprise reversal, a spokesperson for Sinema said the Arizona senator did not have a comment on the bill because “she will need to review the text.”

Joe Manchin

Former Top Obama Economic Adviser Talked Up Dem Package With Joe Manchin Days Before Senator’s Surprising Reversal: Report

Larry Summers Discussed Dem Package With Manchin Before Senator's Surprising Reversal: Report

Barack Obama

Democratic Party

U.S. Senate

Former Obama administration economic adviser <a href="https://www.dailywire.com/topic/larry-summers">Larry Summers</a> warned Sunday that all precedents in the <a href="https://www.dailywire.com/topic/economy">economy</a> are pointing to a recession happening in the next two years. 
Summers, appearing on “<a href="https://www.nbcnews.com/meet-the-press/video/fmr-treasury-secretary-larry-summers-says-recession-likely-by-end-of-next-year-142416965792">Meet The Press</a>,” told NBC News host Chuck Todd that “a whole range of indicators” — including markets, relative levels of <a href="https://www.dailywire.com/topic/interest-rates">interest rates</a> at different durations, consumer expectations, and supply and demand — are pointing toward a recession, which is defined as two consecutive quarters of negative economic growth. 
“All of that tells me that, while I wouldn’t presume whether to judge the timing, the dominant probability would be by the end of next year we will be seeing a recession in the American economy,” said Summers, who also served as treasury secretary in the 1990s. He also said that this perspective had become the common view among a number of statistical models and forecasters. 
Noting economic precedents, Summers said in a different <a href="https://www.bloomberg.com/news/articles/2022-04-14/podcast-summers-predicts-a-u-s-recession-more-likely-than-a-soft-landing?srnd=premium">Bloomberg</a> interview, “If you look at history, there has never been a moment when inflation was above 4% and unemployment was below 5% when we did not have a recession within the next two years.”  
The Biden administration, for its part, has been acknowledging the challenge of the economy but has also echoed in lock-step that an economic downturn isn’t inevitable. Department of Energy Secretary <a href="https://www.dailywire.com/topic/jennifer-granholm">Jennifer Granholm</a> and Department of Treasury Secretary <a href="https://www.dailywire.com/news/yellen-recession-not-inevitable-russias-war-to-blame-for-soaring-inflation">Janet Yellen</a> both spoke to this point on Sunday morning news shows, as well. 
“I expect the economy to slow,” Yellen told George Stephanopolous on ABC News. “It’s been growing at a very rapid rate, as the economy, as the labor market, has recovered. We have reached full employment. It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
According to a <a href="https://www.dailywire.com/news/new-survey-reveals-when-ceos-expect-a-recession-to-hit">Conference Board survey</a> of 750 CEOs released on Friday, a majority of top company execs foresee a recession in the next 12 to 18 months. A small minority, 15%, said in the same survey that the region in which their company operates is already in a recession. In a National Association of Manufacturers Survey, nearly <a href="https://www.dailywire.com/news/majority-of-manufacturers-predict-recession-within-the-next-year">6 in 10 business leaders</a> indicated that a recession was more likely in the next year due to inflationary pressures. 
President <a href="https://www.dailywire.com/topic/joe-biden">Joe Biden</a> himself has suggested Vladimir Putin is partly responsible for rising costs and accused businesses of price gouging. On Thursday, in an interview with the Associated Press, Biden encouraged Americans to <a href="https://www.dailywire.com/news/biden-claims-recession-not-inevitable-tells-americans-they-shouldnt-believe-economist-warnings">wait and see</a> whether economists were correct about their recession predictions. 
“They shouldn’t believe a warning. They should just say: ‘Let’s see. Let’s see, which is correct.’ And from my perspective, you talked about a recession. First of all, it’s not inevitable,” said Biden.

Top Obama Economic Advisor: ‘Whole Range Of Indicators’ Point To Coming Recession

Larry Summers Says 'Range Of Indicators' Point To Recession In Next Two Years

Department of the Treasury

Janet Yellen

Recession

Former Treasury Secretary and Harvard professor Larry Summers said there is &#8220;certainly a risk&#8221; of a recession in the next year.
Appearing as a guest on CNN&#8217;s &#8220;State of the Union&#8221; 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.
&#8220;[Current Treasury] Secretary [Janet] Yellen&#8230; said this week, &#8216;there is nothing to suggest a recession is in the works,'&#8221; Bash began. &#8220;Do you agree with that?&#8221; she asked.
&#8220;No, I don’t,&#8221; Summers said flatly.
&#8220;You think a recession is in the works?&#8221; Bash followed up.
&#8220;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],&#8221; Summers responded. &#8220;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.&#8221;
<blockquote class="twitter-tweet">
&#8220;It&#8217;s more likely than not we&#8217;ll have a recession within the next two years.&#8221;
Former Treasury Secretary <a href="https://twitter.com/LHSummers?ref_src=twsrc%5Etfw">@LHSummers</a> tells <a href="https://twitter.com/DanaBashCNN?ref_src=twsrc%5Etfw">@DanaBashCNN</a> why he disagrees with current Treasury Secretary Janet Yellen&#8217;s projection that a recession is not on the horizon. <a href="https://twitter.com/CNNSotu?ref_src=twsrc%5Etfw">@CNNSotu</a> <a href="https://twitter.com/hashtag/CNNSOTU?src=hash&amp;ref_src=twsrc%5Etfw">#CNNSOTU</a> <a href="https://t.co/gzrR3B6TBy">pic.twitter.com/gzrR3B6TBy</a>
— CNN (@CNN) <a href="https://twitter.com/CNN/status/1535989161517367296?ref_src=twsrc%5Etfw">June 12, 2022</a></blockquote>
<a href="https://www.youtube.com/watch?v=R2f69w4yGh4">Yellen</a> made the comments earlier this week at a policy forum in Washington, D.C., in response to a tweet from rapper <a href="https://www.dailywire.com/news/even-cardi-misses-trumponomics-cardi-b-wants-to-know-when-they-will-announce-the-recession">Cardi B</a> 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.&#8221;
“We have a very strong economy. I know people are very upset — and rightfully so — about inflation. But there’s nothing to suggest&#8230;that a recession is in the works,” she added.
Meanwhile, inflation <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">soared 8.6%</a> annually in May, breaking yet another 40-year high, while the University of Michigan&#8217;s <a href="http://www.sca.isr.umich.edu/">Consumer Sentiment Index</a> fell to 50.4, a 14% decline and the lowest number on record.

FOX Business Network’s Maria Bartiromo Interviews Former Treasury Secretary & White House Economic Advisor Larry Summers

Former Treasury Sec, Harvard Professor: ‘Certainly A Risk Of Recession In The Next Year’

Former Treasury Secretary: 'Certainly A Risk Of Recession In The Next Year'

Dana Bash

Larry Summers, who served as Treasury Secretary under former President Bill Clinton and director of the National Economic Council under former President Barack Obama, warned in an interview this week that the U.S. is moving toward &#8220;higher entrenched inflation.&#8221;
&#8220;I think the data flow is saying what I&#8217;ve thought for quite some time that, yes, there are transitory elements in inflation, and very likely they will recede, but we are basically moving towards higher entrenched inflation,&#8221; Summers said. &#8220;It&#8217;s there in expectations, it&#8217;s there in wages, it&#8217;s there in labor shortages, it&#8217;s there in the pervasive pattern across many different prices.&#8221;
&#8220;And people try to excuse it by picking this figure and that figure from month to month, but we&#8217;ve got an overheated economy, and the Fed&#8217;s gonna have a very real challenge of cooling that economy off and doing it in a controlled way,&#8221; he continued. &#8220;That has not been done very successfully in the past. So it&#8217;s going to be a very challenging year for macroeconomic policy.&#8221;
When asked if top White House officials were right in saying that the inflation problem was a result of &#8220;a supply side problem,&#8221; Summers responded, &#8220;No, he&#8217;s wrong.&#8221;
&#8220;We have a massive, overheated labor market,&#8221; Summers continued. &#8220;We have the highest ratio of vacancies to unemployment in the country&#8217;s history, by a large margin. We have shortages of labor, in everything from psychotherapy, to McDonalds, in everything from investment analysts to gardeners, that suggests a surfeit of purchasing power and demand relative to the capacity of the economy to produce and unless we bring those things into balance, we&#8217;re going to have not just higher inflation, but possibly even accelerating inflation. And we need to recognize that we have an overheated economy that we are going to need to cool off.&#8221;
Summers later <a href="https://www.bloombergquint.com/amp/onweb/summers-says-u-s-risks-recession-by-blaming-inflation-on-greed">added</a>, “Every time a Washington policy maker suggests that this is caused by corporate greed or some such, they are delaying the date at which we will achieve the credibility necessary to bring down inflation with stable employment.”
Summers also said with respect to President Joe Biden&#8217;s picks for three openings on the Fed&#8217;s Board of Governors that what the Fed decides to focus on is going to make or break its credibility and that could cause further problems.
“If a sense develops that there’s a desire to politicize the Fed by focusing it towards other issues &#8212; beyond the crucial issues of financial stability &#8212; I think that could be problematic for the Fed’s credibility,&#8221; Summers said. &#8220;And so it will be very important for the nominees, who have distinguished track records in different areas in the past, to present their views to Congress and for Congress to very seriously consider those views.”
WATCH:
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Related: <a href="https://www.dailywire.com/news/top-obama-economic-adviser-fears-recession-says-federal-reserve-was-too-late-on-addressing-inflation">Top Obama Economic Adviser Fears Recession, Says Federal Reserve Was Too Late On Addressing Inflation</a>

Obama Senior Economic Advisor Lawrence Summers Interview

Top Obama Economist Delivers Stark Warning About What Is Happening With Inflation

Lawrence Summers, a Harvard economist and former Secretary of the Treasury under President Bill Clinton and a top economic advisor to President Barack Obama, stated Wednesday morning that the United States has a &#8220;serious inflation problem.&#8221;
Summers&#8217; comment came in response to a <a href="https://www.axios.com/biden-inflation-report-ffbc02fe-1df4-4f27-85db-d00b29b4cc73.html?utm_campaign=organic&amp;utm_medium=socialshare&amp;utm_source=twitter">report from Axios</a> that the Biden White House is looking to downplay economic woes by comparing U.S. rising prices of goods to prices globally as well as the overall, potential downward trend of inflation in 2022. Still, the liberal economist noted that inflation is &#8220;running well ahead of anything seen&#8221; during historic highs in the 1970s.
According to Axios, White House officials &#8220;are trying to temper public expectations and minimize the bad-news blow.&#8221; To do so, they hope to show that inflation will be down from 7% to 3% over the next two years.
Regardless of their efforts, Summers tweeted that America has a &#8220;serious inflation problem whatever the precise CPI reading. Inflation is running well ahead of anything seen during the guns and butter Vietnam episode and 50 percent above where it was when Pres Nixon imposed wage price controls.&#8221;
Summers also noted that economic experts have been wrong about inflation before, so he cautioned trusting the prediction that inflation will decrease anytime soon.
&#8220;White House cites leading economists as foreseeing sharp declines in inflation over next two years. Certainly could happen. On other hand same kind of consensus was looking for inflation at well below 3 percent this year and it turned out to be 7,&#8221; he wrote.
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White House cites leading economists as foreseeing sharp declines in inflation over next two years. Certainly could happen. On other hand same kind of consensus was looking for inflation at well below 3 percent this year and it turned out to be 7.
&mdash; Lawrence H. Summers (@LHSummers) <a href="https://twitter.com/LHSummers/status/1481241782709018628?ref_src=twsrc%5Etfw">January 12, 2022</a></blockquote>
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As noted by former Trump advisor Steve Cortes, &#8220;Larry Summers is hardly MAGA, but he is an economist who sees the reality of what’s happening to working class Americans under Biden’s Inflation surge.&#8221;
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Larry Summers is hardly MAGA, but he is an economist who sees the reality of what’s happening to working class Americans under Biden’s Inflation surge. <a href="https://t.co/fTG5hZBa3m">pic.twitter.com/fTG5hZBa3m</a>
&mdash; Steve Cortes (@CortesSteve) <a href="https://twitter.com/CortesSteve/status/1481248656888053764?ref_src=twsrc%5Etfw">January 12, 2022</a></blockquote>
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Summers has been one of the lone voices on the Left warning about rising inflation for quite some time. In November, Summers wrote in an op-ed for <a href="https://www.washingtonpost.com/podcasts/please-go-on/larry-summers-says-inflation-will-get-worse-before-it-gets-better/">The Washington Post</a> that the cost of goods would get worse before improving.
&#8220;Excessive inflation and a sense that it was not being controlled helped elect Richard Nixon and Ronald Reagan, and risks bringing Donald Trump back to power,&#8221; Summers wrote at the time. &#8220;While an overheating economy is a relatively good problem to have compared to a pandemic or a financial crisis, it will metastasize and threaten prosperity and public trust unless clearly acknowledged and addressed.&#8221;
As The Daily Wire <a href="https://www.dailywire.com/news/breaking-inflation-rises-7-in-december-over-previous-year-fastest-rise-in-almost-40-years">reported</a> on Wednesday, the Labor Department revealed data showing that in December, consumer prices rose by 7% over the previous year, the fastest increase in roughly 40 years.
In response to those figures, Republican National Chairwoman Ronna McDaniel slammed the Biden administration for failing to rein in the price of pretty much everything.
&#8220;Under Joe Biden everything costs more, store shelves are empty, and small businesses are struggling to hire workers and stay open,&#8221; McDaniel said in a statement given to The Daily Wire. &#8220;Joe Biden does not care about the hurt he&#8217;s brought on millions of Americans – with inflation at the highest level since 1982. Americans are paying the price for Biden&#8217;s failures, and Biden doesn’t care.&#8221;

Inflation Graphic

Even Obama’s Top Economic Advisor Recognizes ‘We Have A Serious Inflation Problem’

A top Democratic economist fears that the United States has produced an inflationary environment that will require a recession to escape.
Larry Summers — who worked as Treasury Secretary under the Clinton administration and National Economic Council director under the Obama administration — said during an interview with <a href="https://www.bloomberg.com/news/articles/2021-12-23/summers-sees-risk-of-recession-soon-secular-stagnation-later">Bloomberg</a> that the Federal Reserve’s recent monetary policy taper came far too late.
&#8220;If I thought we could sustainably run the economy in a red-hot way, that would be a wonderful thing, but the consequence — and this is the excruciating lesson we learned in the 1970s — of an overheating economy is not merely elevated inflation, but constantly rising inflation,&#8221; Summers said. &#8220;That’s why my fear is that we are already reaching a point where it will be challenging to reduce inflation without giving rise to recession.&#8221;
“I’m surprised by how low long-term interest rates are,” Summers continued. “Markets are foreseeing that we will do what’s necessary to contain inflation — and that process will be quite contractionary.”
Summers also pointed to the harmful effects of inflation upon the middle and lower classes.
“There are no examples of successful inflationary policy that has worked out to the benefit of workers,” he said, referring to efforts in the United Kingdom and United States in the 1970s, along with similar campaigns in Latin America. “It backfired with respect to the very people it was trying to help.”
Summers fears “secular stagnation” — a scenario in which economic growth rates are reduced and interest rates are lower than historic norms — may threaten the United States in the long-term.
“I’m really not sure what’s going to come after this current episode,” he said. “I’m certainly not confident that we’re going to have sustained excess demand for many years. The challenge is that we’ve pumped up aggregate demand now, and then who knows how we’re going to work our way through back to more levels of demand.”
To stimulate the economy after COVID-19 and the lockdown-induced recession, the Federal Reserve pegged a near-zero target interest rate and began buying $120 billion in assets each month. In November, policymakers <a href="https://www.dailywire.com/news/as-high-inflation-persists-federal-reserve-unveils-first-official-plan-to-roll-back-stimulus">unveiled</a> the first step in diminishing monetary stimulus — slashing bond purchases by $15 billion in both November and December. More recently, the central bank <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation">said</a> that its asset purchase program would be rolled back faster.
Beyond the Federal Reserve, Summers recently <a href="https://twitter.com/LHSummers/status/1470395480056250370">explained</a> on social media that he “cannot understand” why White House officials “cling to the idea that inflation is caused by bottlenecks” and “will soon recede to normal levels.”
“Given housing prices and tightening labor markets, there is no compelling reason to expect major deceleration in inflation,” he said. “But, even if inflation subsided to .2 percent a month, the annualized inflation rate would be 6.5% in March 5.1% in June and 4.0% before the election in September.”
Price levels are continuing to rise in the United States. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index — which the Federal Reserve uses to inform monetary policy decisions — <a href="https://www.dailywire.com/news/the-feds-favorite-inflation-measure-hits-three-decade-high">hit</a> a year-over-year rate of 4.1% in October. More recently, the Bureau of Labor Statistics <a href="https://www.dailywire.com/news/breaking-inflation-skyrockets-to-6-8-higher-than-expected-fastest-rate-in-nearly-40-years">revealed</a> that the Consumer Price Index is rising at a 6.8% clip — the largest year-over-year increase since June 1982.

Top Obama Economic Adviser Fears Recession, Says Federal Reserve Was Too Late On Addressing Inflation

As inflation continues to rise, Morgan Stanley CEO James Gorman advised the Federal Reserve to hike interest rates.
The Bureau of Labor Statistics <a href="https://www.dailywire.com/news/as-inflation-soars-americans-real-wages-decline">announced</a> last week that inflation rose at a 6.8% pace last month — the largest year-over-year increase since June 1982. Households are grappling with significantly higher price levels in staples such as gasoline, food, vehicles, electricity, and apparel.
As the Federal Reserve begins deliberations on potentially tapering monetary stimulus, Gorman believes that a rate hike would be prudent.
“We are heading toward a rising interest rate environment,” Gorman said during an interview with <a href="https://www.cnbc.com/2021/12/13/morgan-stanley-ceo-gorman-calls-for-the-fed-to-raise-interest-rates-soon.html">CNBC</a>. “I felt the Federal Reserve would be better off storing away some of the rate increases, so when the inevitable downturn comes, you’ve got some ammunition to fight with.”
In order to establish a normal interest rate regime, Gorman said that the central bank will need to carry out 10 rate hikes. “If I were the Fed, I would start moving earlier rather than later. Store away some ammunition and accept the reality,” he continued.
“I don’t think it derails the economy,” Gorman added. “This is what you need, you need balance in the economy.”
Aligning with Gorman’s comments, the Organization for Economic Cooperation and Development recently <a href="https://www.dailywire.com/news/oecd-forced-to-slash-economic-growth-forecasts-due-to-high-inflation">noted</a> that the global recovery from COVID-19 and the lockdown-induced recession is “losing momentum” due to high price levels.
&#8220;Alongside cost pressures from manufacturing supply bottlenecks and food price increases, imbalances in the energy market are a key factor driving up inflation in all economies,&#8221; said the group. &#8220;Gas prices have risen sharply, notably in Europe, and risks are high, with storage levels around 28% lower than they would normally be at this time of the year. Rising food and energy costs are inevitably hitting low-income households the hardest.&#8221;
&#8220;Inflationary pressures are proving stronger and more persistent than expected a few months ago. Consumer price inflation in the OECD is now projected to start fading in 2022, before moderating as key bottlenecks ease, capacity expands, more people return to the labour force and demand rebalances. The Outlook underlines the risk that continued supply disruptions, perhaps associated with further waves of COVID-19 infections, may result in longer and higher inflationary pressure.&#8221;
On Monday, Lawrence Summers — who worked as Treasury Secretary under the Clinton administration and National Economic Council director under the Obama administration — likewise <a href="https://www.dailywire.com/news/top-obama-economist-debunks-biden-talking-point-about-root-causes-of-inflation">called</a> it a “long shot” to believe that inflation will soon return to “levels anywhere near” the Federal Reserve’s targets.
“Given housing prices and tightening labor markets, there is no compelling reason to expect major deceleration in inflation,” he said. “But, even if inflation subsided to .2 percent a month, the annualized inflation rate would be 6.5% in March 5.1% in June and 4.0% before the election in September.”
“My guess is barring a major recessionary or financial shock next fall, headline inflation will round to 5 percent,” Summers continued. “We are beyond where the Vietnam inflation took us but still have plenty of time to stop a late 1970s situation from developing, if we have the will.”

Money stack

As Inflation Continues, Morgan Stanley CEO Says Federal Reserve Needs To Raise Interest Rates

Federal Reserve

A top Democratic economist castigated the Biden administration for its denial over the root causes of soaring inflation.
On Friday, the Bureau of Labor Statistics <a href="https://www.dailywire.com/news/as-inflation-soars-americans-real-wages-decline">announced</a> that the Consumer Price Index rose at a 6.8% rate last month — the largest year-over-year increase in the metric since June 1982, as well as the sixth straight month in which inflation has remained above 5%. Expenses such as used gasoline, food, vehicles, electricity, and apparel are witnessing significantly higher price levels.
On Monday, Lawrence Summers — who worked as Treasury Secretary under the Clinton administration and National Economic Council director under the Obama administration — <a href="https://twitter.com/LHSummers/status/1470395480056250370">explained</a> on social media that he “cannot understand” why White House officials “cling to the idea that inflation is caused by bottlenecks” and “will soon recede to normal levels.”
In November, for example, White House Press Secretary Jen Psaki <a href="https://www.dailywire.com/news/psaki-says-inflation-is-being-used-as-a-political-cudgel">argued</a> that “everyone from the Federal Reserve to Wall Street” foresees a deceleration in inflation next year. Weeks earlier, Transportation Secretary Pete Buttigieg <a href="https://www.dailywire.com/news/buttigieg-supply-chain-clog-happening-in-part-because-biden-has-successfully-guided-this-economy">said</a> that the overstimulated economy and supply chain bottlenecks are linked to Biden’s successful policies. Meanwhile, Treasury Secretary Janet Yellen <a href="https://www.dailywire.com/news/yellen-touts-biden-spending-plan-then-promises-inflation-wont-reach-1970s-levels">claimed</a> that the Build Back Better Act will “ease inflationary pressure.”
Summers also called it a “long shot” to believe that inflation will soon revert to “levels anywhere near” the Federal Reserve’s targets.
According to Summers, housing prices have increased by as much as 20% since last year — leading to a true inflation rate in the double digits. “Either the official indices are just wrong or more likely 3 to 4 points of inflation from housing are coming in 2022, even if there is no further increase in rents or home prices,” he explained. “This effect far exceeds any benefit from lower energy or used car prices.”
Summers therefore sees no immediate end in sight for high price levels.
“Given housing prices and tightening labor markets, there is no compelling reason to expect major deceleration in inflation,” he repeated. “But, even if inflation subsided to .2 percent a month, the annualized inflation rate would be 6.5% in March 5.1% in June and 4.0% before the election in September.”
“My guess is barring a major recessionary or financial shock next fall, headline inflation will round to 5 percent,” Summers deduced. “We are beyond where the Vietnam inflation took us but still have plenty of time to stop a late 1970s situation from developing, if we have the will.”
In comments made during a recent CNN interview, Summers <a href="https://www.dailywire.com/news/top-obama-economist-quite-unlikely-that-inflation-will-recede-back-to-its-normal-rate">predicted</a> that the United States is poised to witness “inflation of a kind we haven’t seen in 30 years” unless the Federal Reserve tapers its monetary stimulus.
“I think it’s possible but quite unlikely that inflation will recede back to its normal 2 percent level without some significant change in the path &#8230; we’re now on,” he said. “I think the Fed has made a significant mistake in the approach that it’s taking by doubling down on the massive fiscal stimulus we had at the beginning of the year with really easy monetary policy.”

Top Obama Economist Debunks Biden Talking Point About Root Causes of Inflation

Larry Summers, who served as Treasury Secretary under former President Bill Clinton and director of the National Economic Council under former President Barack Obama, warned during a CNN interview late last week that it was unlikely that inflation rates would return to normal any time in the near future.
&#8220;Given that you were worried about this before almost anybody else, and given that now you have got all these CEOs saying it&#8217;s going to go a year, maybe even past that, right, at that point, it wouldn&#8217;t be transitory,&#8221; CNN host Erin Burnett said. &#8220;How long do you think inflation is going to go up?&#8221;
&#8220;I think the odds are that we&#8217;re going to have inflation of a kind we haven&#8217;t seen in 30 years, until either the Fed takes some significant move with respect to monetary policy, or until there&#8217;s some kind of accident that disrupts the economic growth we&#8217;re enjoying,&#8221; Summers responded. &#8220;I think it&#8217;s possible but quite unlikely that inflation will recede back to its normal 2 percent level without some significant change in the path we&#8217;re now &#8212; we&#8217;re now on. I think the Fed has made a significant mistake in the approach that it&#8217;s taking by doubling down on the massive fiscal stimulus we had at the beginning of the year with really easy monetary policy.&#8221;
WATCH:
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Larry Summers, Treasury Secretary for Clinton &amp; Obama&#39;s NEC Director:
&quot;I think the odds are that we&#39;re going to have <a href="https://twitter.com/hashtag/inflation?src=hash&amp;ref_src=twsrc%5Etfw">#inflation</a> of a kind we haven&#39;t seen in 30 years&quot; <a href="https://t.co/BtKqDhXo81">pic.twitter.com/BtKqDhXo81</a>
&mdash; Christy Lewis (@Cavalewis) <a href="https://twitter.com/Cavalewis/status/1459598459540054017?ref_src=twsrc%5Etfw">November 13, 2021</a></blockquote>
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TRANSCRIPT PROVIDED VIA <a href="https://transcripts.cnn.com/show/ebo/date/2021-11-12/segment/01">CNN</a>:
<blockquote>BURENTT: OUTFRONT now, Larry Summers, who was treasury secretary for former-President Bill Clinton and director of the National Economic Council under President Obama. And, of course, secretary, you have been warning for months about the threat of inflation. In fact, since the very beginning of this year, when the administration said that &#8212; that &#8212; that that was, you know, crazy talk. And you ended up being right.
So, you hear all these CEOs and, Larry, you hear them. I mean, you know, I played three. You know, as you know, I could give you 30, right? Given that you were worried about this before almost anybody else, and given that now you have got all these CEOs saying it&#8217;s going to go a year, maybe even past that, right, at that point, it wouldn&#8217;t be transitory. How long do you think inflation is going to go up?
LARRY SUMMERS, FORMER DIRECTOR, NATIONAL ECONOMIC COUNCIL UNDER PRESIDENT OBAMA: I think the odds are that we&#8217;re going to have inflation of a kind we haven&#8217;t seen in 30 years, until either the Fed takes some significant move with respect to monetary policy, or until there&#8217;s some kind of accident that disrupts the economic growth we&#8217;re enjoying.
I think it&#8217;s possible but quite unlikely that inflation will recede back to its normal 2 percent level without some significant change in the path we&#8217;re now &#8212; we&#8217;re now on. I think the Fed has made a significant mistake in the approach that it&#8217;s taking by doubling down on the massive fiscal stimulus we had at the beginning of the year with really easy monetary policy.
BURNETT: And &#8212; and &#8212; you know, obviously, they haven&#8217;t indicated to your point that they are going to &#8212; that they see any mistake that they made. But if they were to turn around now and say, actually, wait. Sorry, we&#8217;re going to start increasing interest rates. Would it be too little, too late?
SUMMERS: I think if they started by saying that they were going to stop immediately buying mortgages in the midst of a major housing bubble, that would be helpful. I think if they said they were going to stop growing their balance sheet and not reduce their balance sheet but just stop the process of growing it &#8212; if they were going to get that done in three months, rather than in eight, that would be helpful. If they signaled that they were on hold towards the possibility of raising rates and that they saw the major problem as being overheating, I think that would be helpful.
BURNETT: And &#8212; and let&#8217;s just be clear. You use the words housing bubble. You think that&#8217;s fair now?
SUMMERS: Yeah. House prices have, in the last 12 months, risen faster than in any single year since they started collecting &#8212; collecting the data.
BURNETT: Yeah.
SUMMERS: (AUDIO GAP) wrong word. Maybe surge is the right word. But we&#8217;ve clearly got a major thing going on in the housing market that hasn&#8217;t, yet, been much reflected in the consumer price indices. But it will be.
BURNETT: And &#8212; and &#8212; and yet, at the same time, and I know you are talking about the combination of both the easy monetary policy, incredibly easy monetary policy, also, fiscal stimulus. You know, look, there&#8217;s been a lot of money going out on the fiscal side to Americans, right? At first, to &#8212; to say don&#8217;t go to work because of the coronavirus. And a lot of those payments have continued, right, and credits.
What that is is resulting in is, you know, people wanting to be paid more to go back to work. Okay. That makes sense. And you are seeing it. 4.4 million Americans quit their jobs in September. That is a record number. It is a record number for the second month running.
There are more than 10 million open jobs in the United States right now. That could be a huge problem for an economy trying to really, really take off. What &#8212; what do you think is going on here, given the strong wage growth we are seeing?
SUMMERS: I think we&#8217;ve got a tight labor market, not a loose labor market. 4.7 percent unemployment&#8217;s actually pretty low by broad historical standards. And as you just said, Erin, the vacancy and the quit rates are unprecedently high.
So we got to recognize our problem is not that not enough people have jobs. That is not the current problem. The current problem is that we are pushing demand into the economy faster than supply can grow and that we are just going to get more and more inflation until we stop doing that.
BURNETT: All right.
SUMMERS: That&#8217;s the real &#8212; that&#8217;s the real problem.
BURNETT: Yeah. Well, it&#8217;s a &#8212; it&#8217;s a pretty terrifying problem. It is a big problem.
All right. I appreciate your time, Secretary. Thank you very much. Always good to talk to you.</blockquote>

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