Former U.S. Treasury Secretary Lawrence Summers paints a grim picture of the future of the U.S. economy, according to a Bloomberg report.
Noted economist Summers has cautioned that the Federal Reserve's delayed response to tackle record high inflation could tip the world's largest economy towards a recession.
“We’ve got a fairly serious inflationary situation,” Summers told Bloomberg during a podcast titled "Stephanomics."
Roughly 10 days ago, the central bank said it will start winding down pandemic support in what could be the first move towards increasing historically low interest rates.
The fed said it may also set the stage for three potential rate hikes in the coming year.
But Summers says it might be too late already.
“My fear is that we are already reaching a point where it will be challenging to reduce inflation without giving rise to recession," Summers told Bloomberg.
U.S. consumer price inflation accelerated to the fastest pace in four decades last month, according to latest data from the Bureau of Labor Statistics.
"If I thought we could sustainably run the economy in a red-hot way, that would be a wonderful thing, but the consequence, and this is the excruciating lesson we learned in the 1970s, of an overheating economy is not merely elevated inflation, but constantly rising inflation,” Summers told Bloomberg.
Inflation has slammed U.S. households, a recent poll by Gallup found.
On a monthly basis, inflation was up 0.8%, the BLS said, with both tallies essentially matching Wall Street forecasts.
President Joe Biden said a few weeks ago that inflation has peaked after rate of inflation touched a 39-year-high.
"It’s the peak of the crisis. I think you’ll see it change sooner than, quicker than, more rapidly than it will take, than most people think," according to a Dec. 10 Bloomberg report.