Larry Summers said inflation fears are on the rise after Friday's jobs report showed U.S. companies hired 528,000 people last month. said. Double what analysts expected.
Former Treasury secretary says it's good that companies are hiring more Americans, but it's complicating the Federal Reserve's efforts to keep very high inflation in check.
"I'm more worried about inflation tonight than last night," Summers said Friday. "And I think it's misleading not to look at things that way."[10][11][12]According to the latest inflation data,[13]consumer prices fell to what he expected in June. He was up 9.1%. This is his highest since November 1981.
Summers told his CNN on Friday: There is nothing in this report to suggest that inflation is subdued, rather the opposite.
"You seenews of people getting jobs is always welcome," said the former Harvard president, who was also an economic adviser to Barack Obama.
Summers then said CNN anchor Wolff he countered Blitzer, saying the United States had regained the jobs lost in the coronavirus pandemic.
"Wage increases are welcome news, but I have to say I'm not as optimistic as your report suggests," Summers said. "For a while, the main problem in the economy was inflation."
Summers,ignited by critics, } suggests thatthe unemployment rate needs to rise to bring down the high cost ofproducts, Wages are rising, but they still lag inflation, he said.
"Yes, his wages went up by half a percentage point last month. But that's about 6% a year, compared to last year's inflation rate of about 9%," Summers said. .
``I think our core problem is that an unsustainably overheated economy is causing high inflation and cutting people's salaries. It has not been featured in the news.”
Summers added:
The situation you and I were talking about — for quite some time on this show was talking
Mr. Summers said the Federal Reserve must weather a perilous combination of labor shortages and high inflation in key sectors of the economy.
} He said the strong jobs data would make it harder for the Fed to make a so-called "soft landing." That is, aggressively raising interest rates while avoiding the economy slipping into recession.
Wages rise sharply in dollar terms when labor is scarce but we still do when it's not in purchasing power because prices are rising faster. of the cycle," he said.
"And that makes it very difficult for the Fed to achieve the proverbial soft-his landing." Kudos to him for passing legislation, including the CHIPS Act.
But the economy is headed for recession because "the fundamental challenge facing the economy is a kind of overheating, and this shows that we are overheating more."
