America could experience a recession within the next 18 months, former Treasury Secretary Larry Summers predicted during an appearance on CNN's "The Situation Room with Wolf Blitzer on October 6.
"I think it's more likely than not that sometime in the next year or 18 months we will have a recession. I think that's a consequence of the excesses that the economy has been through, and historical experience suggests that the kind of inflation we have rarely returns to normal levels, to target levels of around 2 percent without some kind of recession," Summers said.
Summers, who served as the US Treasury Secretary during the Bill Clinton administration and as an economic adviser during the Barack Obama administration, added:
"Now, I don’t think that means we’re going to have something like we had after COVID or something like we had during the [2008] financial crisis, but I do think that we had a period of very substantial stimulus and I think the other side of that is likely to be a downturn."
Summers weighed in on the recent decision of the Organization of the Petroleum Exporting Countries (OPEC) and its major non-member partners to cut oil output by two million barrels per day (bpd). According to him, the move will exacerbate already soaring inflation and heighten the chances of a recession.
The US must reduce "its dependence on unstable and problematic parts of the world for our energy," argued Larry Summers.
"That means Senator Manchin's permitting policies, whether its permitting pipelines or permitting more natural gas production, or permitting more electricity transmission, need to move as rapidly as possible," Summers said.
Natural gas, albeit a hydrocarbon, “is a good thing not a bad thing,” the American economist underscored, saying that if the US produced more of it, it would be more secure.
He added that since it would often replace coal, “the less hydrocarbons and carbon dioxide we will be emitting into the air." Summers was referencing Democrats such as Rep. Rashida Tlaib, D-Mich., who have spoken out against domestic natural gas production while touting radical climate demands.
The ex-Clinton era Treasury Secretary's warning of a looming recession is not new. In September, he told Bloomberg News that "we are almost certainly going to see a downturn in the economy." In the early days of the Biden administration, during an interview on CNN's "New day" in November 2021, Summers voiced warnings regarding out-of-control inflation, saying that increased government spending from the coronavirus stimulus packages would set off "inflationary pressures" that haven't been seen in a generation.
30 September 2022, 14:13 GMT
In late September, Federal Reserve Vice Chair Lael Brainard said that US inflation, which grew 6.2% during the year to August, versus 6.3% in the 12 months to July, remained at a "very high" level and could continue to shock Americans.