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Stagflation is the ‘most likely’ outcome over the next two years

In an interview with Friday’s edition of Bloomberg’s “Wall Street Week,” the economist, Harvard professor, director of the National Economic Council under President Barack Obama and Treasury Secretary under President Bill Clinton , Larry Summers, said stagflation is “the overriding probability as to where we’re going to get” over the next two years.

Summers said: “I think that’s the most likely place we’ll be. If stagflation means rising unemployment and still high inflation, I think that’s the overriding probability as to what we’re going to do in the last two years – in the next two years. As I said before… the painful fact that needs to illuminate our view is that we have never had a time when unemployment was below 4%, inflation was above 4% and we avoided the recession for the next two years – the next two years. And right now unemployment is well below 4% and inflation is well above 4%. A lot of people say, look, the job market is so strong, why would anyone think we’re going to have a recession? What the data shows is that the lower unemployment is, the more likely it is to fall in the coming months. »

Follow Ian Hanchett on Twitter @IanHanchett




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