{"id":790,"date":"2023-02-14T14:32:22","date_gmt":"2023-02-14T19:32:22","guid":{"rendered":"https:\/\/embarrdowns.com\/larry-summers-warns-of-inflation-risk-if-fed-fails-to-act\/"},"modified":"2023-02-14T14:32:23","modified_gmt":"2023-02-14T19:32:23","slug":"larry-summers-warns-of-inflation-risk-if-fed-fails-to-act","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/larry-summers-warns-of-inflation-risk-if-fed-fails-to-act\/","title":{"rendered":"Larry Summers Warns of Inflation Risk if Fed Fails to Act"},"content":{"rendered":"

Former Treasury Secretary Larry Summers warned that the US economy could face a sudden downturn if the Federal Reserve fails to rein in inflation.[0]<\/a><\/sup> Speaking on NPR\u2019s \u2018Here & Now Anytime\u2019 podcast Wednesday, the American economist and former president of Harvard University said consumer price pressures have eased and the economy is very strong, given a low unemployment rate.[1]<\/a><\/sup> <\/p>\n

He stated that he believes the general agreement has become too comfortable with inflation for multiple explanations.[2]<\/a><\/sup> He remarked that, despite the recent relaxation, inflation is still higher than it was two years ago.[3]<\/a><\/sup> Making a football analogy ahead of the Super Bowl, the former Treasury Secretary said we are getting closer to the red zone with respect to inflation, where it is tough to navigate.<\/p>\n

\u201cIt\u2019s easier to move the ball down the field at midfield than it is when you\u2019re in the red zone,\u201d he said.[4]<\/a><\/sup> We are nearing the point of inflation referred to as the red zone.<\/p>\n

He compared inflation to a half-way healed \u201cinfection\u201d that could return, in a harder fight for the Fed if not properly treated.[1]<\/a><\/sup><\/p>\n

\u201cWe\u2019ve all had the experience of taking a course of drugs and giving up, stopping the drugs before the course was exhausted but simply because we felt better,\u201d he said.[5]<\/a><\/sup> \u201cAnd then, whatever infection we had came back, and it was harder to fight the second time.\u201d[6]<\/a><\/sup><\/p>\n

The jobs report released on Friday showed an impressive 517,000 jobs added in January and unemployment decreasing to an astonishing 3.4%, the lowest rate since 1969.[7]<\/a><\/sup> Economists had anticipated an addition of 185,000 jobs to the market, yet the Federal Reserve’s frequent rate hikes over the past year had caused a decrease in hiring.[7]<\/a><\/sup><\/p>\n

The Fed has raised rates by 450 basis points to bring inflation down to its 2% target.[1]<\/a><\/sup> Inflation has been moderating since mid-2022, with December\u2019s reading coming in at 6.5%, the lowest level in over a year.[5]<\/a><\/sup> That\u2019s boosted investor hopes that the Fed will temper what has been an aggressive monetary tightening campaign, raising the odds of a soft landing \u2013 cooling inflation without triggering a recession.[8]<\/a><\/sup><\/p>\n

Investors are still worried that the robust jobs data from January might revive inflationary pressures, even though they have been decreasing.[9]<\/a><\/sup> When the labour market is competitive, wage increases are often seen.[1]<\/a><\/sup><\/p>\n

0. <\/span>“Summers Sees Risk of ‘Sudden Stop’ in Economy After Jobs Surge” Bloomberg, 3 Feb. 2023, https:\/\/www.bloomberg.com\/news\/articles\/2023-02-03\/summers-sees-risk-of-sudden-stop-in-economy-after-jobs-surge<\/a><\/a><\/p>\n

1. <\/span>“Inflation could return as a worse ‘infection’ if Fed mucks up: Summers” Markets Insider, 9 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/inflation-could-return-worse-infection-if-fed-mucks-up-summers-2023-2<\/a><\/a><\/p>\n

2. <\/span>“Ahead of Tuesday’s CPI Data, Larry Summers Warns Further Inflation Reduction Will Be Harder: ‘We’re Getti” Benzinga, 11 Feb. 2023, https:\/\/www.benzinga.com\/news\/23\/02\/30867933\/ahead-of-tuesdays-cpi-data-larry-summers-warns-further-inflation-reduction-will-be-harder-were-getti<\/a><\/a><\/p>\n

3. <\/span>“Larry Summers: ‘Big mistake’ to think US economy ‘out of the woods'” msnNOW, 6 Feb. 2023, https:\/\/www.msn.com\/en-us\/money\/markets\/larry-summers-big-mistake-to-think-us-economy-out-of-the-woods\/ar-AA17aujQ<\/a><\/a><\/p>\n

4. <\/span>“Larry Summers warns now is not the time for investor \u2018euphoria\u2019\u2014markets are headed for a \u2018turbulent period\u2019” Fortune, 13 Feb. 2023, https:\/\/fortune.com\/2023\/02\/13\/larry-summers-economy-interest-rates-fed-inflation-cpi-stock-market\/<\/a><\/a><\/p>\n

5. <\/span>“Larry Summers says the economy could be headed towards a \u2018Wile E. Coyote moment\u2019” Fortune, 9 Feb. 2023, https:\/\/fortune.com\/2023\/02\/09\/larry-summers-economic-outlook-coulwiley-coyote-momeny-layoffs-recession-inflation\/<\/a><\/a><\/p>\n

6. <\/span>“Economist Larry Summers compares the Fed\u2019s inflation fight to taking a medicine for an \u2018infection\u2019\u2014and says the \u2018risks are very large\u2019 that the economy tips into a recession” Fortune, 9 Feb. 2023, https:\/\/fortune.com\/2023\/02\/09\/larry-summers-compares-inflation-to-infection-big-risks-recession<\/a><\/a><\/p>\n

7. <\/span>“Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up” KTVZ, 5 Feb. 2023, https:\/\/ktvz.com\/money\/cnn-business-consumer\/2023\/02\/05\/larry-summers-more-likely-the-fed-can-pull-off-a-soft-landing-but-dont-get-hopes-up-2\/<\/a><\/a><\/p>\n

8. <\/span>“Larry Summers: Soft landing is likely but US is still ‘not out of the woods'” Markets Insider, 6 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/larry-summers-us-economy-soft-landing-inflation-fed-rate-hikes-2023-2<\/a><\/a><\/p>\n

9. <\/span>“Former Treasury Secretary Larry Summers compares falling inflation to a half-way healed ‘infection’ that could” Business Insider India, 9 Feb. 2023, https:\/\/www.businessinsider.in\/stock-market\/news\/former-treasury-secretary-larry-summers-compares-falling-inflation-to-a-half-way-healed-infection-that-could-worsen-if-not-treated-properly\/articleshow\/97779896.cms<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Former Treasury Secretary Larry Summers warned that the US economy could face a sudden downturn if the Federal Reserve fails to rein in inflation.[0]<\/a><\/sup> Speaking on NPR\u2019s \u2018Here & Now Anytime\u2019 podcast Wednesday, the American economist and former president of Harvard University said consumer price pressures have eased and the economy is very strong, given a low unemployment rate.[1]<\/a><\/sup> <\/p>\n

He stated that he believes the general agreement has become too comfortable with inflation for multiple explanations.[2]<\/a><\/sup> He remarked that, despite the recent relaxation, inflation is still higher than it was two years ago.[3]<\/a><\/sup> Making a football analogy ahead of the Super Bowl, the former Treasury Secretary said we are getting closer to the red zone with respect to inflation, where it is tough to navigate.<\/p>\n

\u201cIt\u2019s easier to move the ball down the field at midfield than it is when you\u2019re in the red zone,\u201d he said.[4]<\/a><\/sup> We are nearing the point of inflation referred to as the red zone.<\/p>\n

He compared inflation to a half-way healed \u201cinfection\u201d that could return, in a harder fight for the Fed if not properly treated.[1]<\/a><\/sup><\/p>\n

\u201cWe\u2019ve all had the experience of taking a course of drugs and giving up, stopping the drugs before the course was exhausted but simply because we felt better,\u201d he said.[5]<\/a><\/sup> \u201cAnd then, whatever infection we had came back, and it was harder to fight the second time.\u201d[6]<\/a><\/sup><\/p>\n

The jobs report released on Friday showed an impressive 517,000 jobs added in January and unemployment decreasing to an astonishing 3.4%, the lowest rate since 1969.[7]<\/a><\/sup> Economists had anticipated an addition of 185,000 jobs to the market, yet the Federal Reserve’s frequent rate hikes over the past year had caused a decrease in hiring.[7]<\/a><\/sup><\/p>\n

The Fed has raised rates by 450 basis points to bring inflation down to its 2% target.[1]<\/a><\/sup> Inflation has been moderating since mid-2022, with December\u2019s reading coming in at 6.5%, the lowest level in over a year.[5]<\/a><\/sup> That\u2019s boosted investor hopes that the Fed will temper what has been an aggressive monetary tightening campaign, raising the odds of a soft landing \u2013 cooling inflation without triggering a recession.[8]<\/a><\/sup><\/p>\n

Investors are still worried that the robust jobs data from January might revive inflationary pressures, even though they have been decreasing.[9]<\/a><\/sup> When the labour market is competitive, wage increases are often seen.[1]<\/a><\/sup><\/p>\n

0. <\/span>“Summers Sees Risk of ‘Sudden Stop’ in Economy After Jobs Surge” Bloomberg, 3 Feb. 2023, https:\/\/www.bloomberg.com\/news\/articles\/2023-02-03\/summers-sees-risk-of-sudden-stop-in-economy-after-jobs-surge<\/a><\/a><\/p>\n

1. <\/span>“Inflation could return as a worse ‘infection’ if Fed mucks up: Summers” Markets Insider, 9 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/inflation-could-return-worse-infection-if-fed-mucks-up-summers-2023-2<\/a><\/a><\/p>\n

2. <\/span>“Ahead of Tuesday’s CPI Data, Larry Summers Warns Further Inflation Reduction Will Be Harder: ‘We’re Getti” Benzinga, 11 Feb. 2023, https:\/\/www.benzinga.com\/news\/23\/02\/30867933\/ahead-of-tuesdays-cpi-data-larry-summers-warns-further-inflation-reduction-will-be-harder-were-getti<\/a><\/a><\/p>\n

3. <\/span>“Larry Summers: ‘Big mistake’ to think US economy ‘out of the woods'” msnNOW, 6 Feb. 2023, https:\/\/www.msn.com\/en-us\/money\/markets\/larry-summers-big-mistake-to-think-us-economy-out-of-the-woods\/ar-AA17aujQ<\/a><\/a><\/p>\n

4. <\/span>“Larry Summers warns now is not the time for investor \u2018euphoria\u2019\u2014markets are headed for a \u2018turbulent period\u2019” Fortune, 13 Feb. 2023, https:\/\/fortune.com\/2023\/02\/13\/larry-summers-economy-interest-rates-fed-inflation-cpi-stock-market\/<\/a><\/a><\/p>\n

5. <\/span>“Larry Summers says the economy could be headed towards a \u2018Wile E. Coyote moment\u2019” Fortune, 9 Feb. 2023, https:\/\/fortune.com\/2023\/02\/09\/larry-summers-economic-outlook-coulwiley-coyote-momeny-layoffs-recession-inflation\/<\/a><\/a><\/p>\n

6. <\/span>“Economist Larry Summers compares the Fed\u2019s inflation fight to taking a medicine for an \u2018infection\u2019\u2014and says the \u2018risks are very large\u2019 that the economy tips into a recession” Fortune, 9 Feb. 2023, https:\/\/fortune.com\/2023\/02\/09\/larry-summers-compares-inflation-to-infection-big-risks-recession<\/a><\/a><\/p>\n

7. <\/span>“Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up” KTVZ, 5 Feb. 2023, https:\/\/ktvz.com\/money\/cnn-business-consumer\/2023\/02\/05\/larry-summers-more-likely-the-fed-can-pull-off-a-soft-landing-but-dont-get-hopes-up-2\/<\/a><\/a><\/p>\n

8. <\/span>“Larry Summers: Soft landing is likely but US is still ‘not out of the woods'” Markets Insider, 6 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/larry-summers-us-economy-soft-landing-inflation-fed-rate-hikes-2023-2<\/a><\/a><\/p>\n

9. <\/span>“Former Treasury Secretary Larry Summers compares falling inflation to a half-way healed ‘infection’ that could” Business Insider India, 9 Feb. 2023, https:\/\/www.businessinsider.in\/stock-market\/news\/former-treasury-secretary-larry-summers-compares-falling-inflation-to-a-half-way-healed-infection-that-could-worsen-if-not-treated-properly\/articleshow\/97779896.cms<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":789,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/790"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=790"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/790\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/789"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}