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

Joe Biden

Larry Summers

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.

Former U.S. Treasury Secretary Larry Summers

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

Biden Administration

Department of the Treasury

Economy

Inflation

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.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
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>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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;
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
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>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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>

President Biden Delivers Remarks On Passage Of Infrastructure Bill

Top Obama Economist: ‘Quite Unlikely That Inflation Will Recede Back To Its Normal’ Rate

President Joe Biden claimed during a CNN town hall event on Wednesday night that Democratic economist Larry Summers is not worried about inflation, despite the fact that Summers has repeatedly warned that inflation is a serious threat to the economy.
Biden made the claim after admitting that prices are up right now, saying, &#8220;It relates to what, in fact, is now needed because we&#8217;re growing.&#8221;
&#8220;I don&#8217;t know anybody &#8212; including Larry Summers, who&#8217;s a friend of mine, who&#8217;s worried about inflation &#8212; is suggesting that there&#8217;s any long-term march here if we do the things we&#8217;re going to do,&#8221; Biden claimed.
However, Summers has repeatedly warned about inflation and recently <a href="https://www.bloomberg.com/news/articles/2021-06-25/summers-sees-u-s-inflation-ending-2021-pretty-close-to-5">predicted</a> that inflation will be running &#8220;pretty close&#8221; to 5% by the end of this year.
Summers <a href="https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/">warned</a> in an op-ed in The Washington Post in February that &#8220;policymakers need to ensure that they have plans in place to address two possible, and quite serious, problems&#8221;:
<blockquote>First, while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown. For credibility, they need to be accompanied by clear statements that the consequences will be monitored closely and, if necessary, there will be the capacity and will to adjust policy quickly.</blockquote>
Politico reported earlier this month that some Biden administration officials are beginning to worry that Summers might have been right with his warning about inflation, especially now that Summers is saying that he is currently more worried about the issue than he was when he made the original warning.
“These figures and labor market tightness and the behavior of housing markets and asset prices are all rising in a more concerning way than I worried about a few months ago,” he <a href="https://www.politico.com/news/2021/07/13/larry-summers-biden-inflation-499502">said</a> in an interview this month. “This raises my degree of concern about an economic overheating scenario. There are huge uncertainties in the outlook, but I do believe the focus of concern right now should be on overheating.”
In a separate interview in June, Summers warned, &#8220;The main risk is that our economy’s going to overheat.&#8221;
“And then once it overheats, it’s going to be hard to put out the fire without doing a lot of damage and causing a lot of problems,&#8221; he added. &#8220;And so I’d like to see us shift towards a policy concern. I mean, let me give you another example.”
WATCH:
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Joe Biden falsely claims former Obama economist Larry Summers isn’t worried about long term inflation.
REALITY CHECK: Summers wrote an op-ed titled &quot;The inflation risk is real.&quot; <a href="https://t.co/O3CDzSY2se">pic.twitter.com/O3CDzSY2se</a>
&mdash; RNC Research (@RNCResearch) <a href="https://twitter.com/RNCResearch/status/1418009630869962752?ref_src=twsrc%5Etfw">July 22, 2021</a></blockquote>
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