“There is certainly a risk of recession,” says former US Treasury secretary

Former Treasury Secretary for United States Larry Summers stated in an interview with CNN that the US economy is at risk of falling into recession in the next two years.

Summers, who held the position during the administration of former President Bill Clinton, disagreed with the speech of the current secretary, Janet Yellen that the country is not at risk of facing a scenario of recession.

“I think when inflation is as high as it is now and unemployment is as low as it is, it’s almost always followed within 2 years by a recession,” he said.

He also cited as warning signs the current situation in the stock and Treasury markets, in addition to consumer sentiment data. For him, “there is certainly a risk of recession next year, and it is more likely that it will occur in the next 2 years”.

For the former secretary, the most optimists were wrong in 2021 to say that the United States would not face a inflation out of control, and they are now wrong again in predicting that the country will avoid a recession.

Even so, he considers that there is little the government can do to contain inflation, at the highest level since 1981. I think the Federal Reserve’s estimates have been very optimistic,” he said.

In the previous week, the price of a gallon of gasoline in the United States hit $5 for the first time in history, and Summers stated that value revolves around geopolitics and situation in Ukraine .

he hopes the fed recognize the seriousness of the problem and change its inflation expectations at this week’s monetary policy meeting, and that it is important to maintain the independence of the US central bank so that it does what is necessary to reduce inflationary pressures.

Among the actions that the government of the president Joe Biden could take against inflation, Summers cited lower tariffs on products coming from China, which he says makes US producers less productive, as well as increased tax cuts during the former president’s administration. Donald Trump and the reduction of prices and medicines.