Larry Summers Warns of a “Sudden Stop” Despite January’s Booming Jobs Report

Former Treasury Secretary Larry Summers is warning of a “sudden stop” in the US economy this year, despite January’s blockbuster jobs report that showed 517,000 jobs added and the unemployment rate dropping to 3.4%, the lowest since 1969.[0]

On Fareed Zakaria GPS Sunday, Summers said it “looks more possible that we’ll have a soft landing than it did a few months ago,” but cautioned that inflation gauges remain too high and that getting back to the 2% target may prove “quite difficult.”[1]

Summers argued that, based on “almost all economic theories,” if the Fed continues to push unemployment so low, inflation will become entrenched, and “we’re going to live with that inflation for a long time.”[2]

The former treasury secretary compared inflation to a half-way healed “infection” that could return, in a harder fight for the Fed if not properly treated.[3]

Despite price pressures cooling, there’s still concern among investors that January’s strong jobs report could fuel inflation again.[3] When the labour market is competitive, wage increases are more likely.[3]

Former New York Fed chief Bill Dudley said it is unlikely the Fed will be able to steer the economy away from a recession, and warned that the Fed has caused a recession every time it’s tried to weaken the labor market as it is currently doing.[4]

He said the Fed can easily reverse any damage caused by a downturn, thanks to reforms put in place from the 2008 crisis, and the Fed’s ability to cut high interest rates to stimulate the economy.[5]

0. “Summers Sees US Soft Landing More Possible Than Few Months Ago” Yahoo! Voices, 5 Feb. 2023,

1. “Larry Summers: ‘Big mistake’ to think US economy ‘out of the woods’” msnNOW, 6 Feb. 2023,

2. “Larry Summers: More likely the Fed can pull off a soft landing, -” KTEN, 5 Feb. 2023,

3. “Former Treasury Secretary Larry Summers compares falling inflation to a half-way healed ‘infection’ that could” Business Insider India, 9 Feb. 2023,

4. “The Fed has caused a recession every time it’s tried to weaken the labor market, and a ‘soft-landing’ of the e” Business Insider India, 8 Feb. 2023,

5. “The Fed caused a recession every time it tried to cool the labor market” Markets Insider, 8 Feb. 2023,