Former U.S. Treasury Secretary Summers said recent U.S. inflation numbers were positive and that an expected recession could come later than previously thought.
Summers said on Bloomberg Television’s program,US Consumer Price Index (CPI) in November“The current situation is better than I thought. I think it’s a good number,” he said. He called the expected recession “a bit of a time delay”.
Still, when the economy does go down, he said, “things will take a while to happen, but they will happen more quickly than we thought.”
If a recession hits, he said, policy makers would face, among other things, a sharp deterioration in the labor market and a sharp decline in the stock market.
On the other hand, if a recession were to occur, corporate profits would fall, and “there will be a negative impact on the market and stock investors will not be able to look away,” he said. He also reiterated the risk that private consumption could plunge off a cliff when households run out of savings.
Summers, who has been a harsh critic of the Fed since last year, said he is now “almost in the right place.” This is because he has raised the policy rate by a total of more than 4 percentage points since March and has promised further rate hikes.
“I’m happy with how the U.S. authorities have caught up so far,” Powell said at a press conference on Thursday, refusing to change the 2% inflation target and showing flexibility in future policy decisions. He praised the Chairman of the Board of Governors (FRB).
news-rsf-original-reference paywall">Original title:Summers Says US Recession Timing Might Have Been ‘Pushed Back’(excerpt)