Democrats ‘ scholar Larry Summers, who has consistently warned President Joe Biden about the reckless government spending that would cause a severe inflation crisis, issued another warning this week that things have never improved and inflation is running significantly higher than the standard federal figures indicate.
Summers ‘ warning comes after Trump ‘s , business took a gut blow on Wednesday when a hotter- than- expected prices report was released, showing a 3.5 % increase over the last 12 months — the highest yr- over- year increase since previous September.
According to the latest , Consumer Price Index data , — which was released by the Bureau of Labor Statistics — key drivers of the higher costs include car insurance, groceries, energy, and fuel. New parents and pet owners are also feeling the pinch, with baby food now rising by over 30 % and pet food up 23.7 % since 2021.
The higher-than-expected inflation figures come only one day after Janet Yellen, the secretary of state, declared that the general state of the house was “quite strong,” and they could snag any plans to begin bringing attention rates back down.
When asked what he thought about the most recent inflation figures during a Bloomberg News interview on Wednesday, Summers responded,” I was not very surprised by the numbers.” The idea that inflation would remain robust or even increase should not come as a surprise to anyone in an economy that is growing faster than the potential, with an unemployment rate that has a three handle in the presence of massive and expanding budget deficits and epically easy financial conditions.
Summers claimed that the Biden administration’s inflation rate is actually higher than the 3.5 % figure.
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” It was n’t me or some outside observer who emphasized the idea of super core inflation,” which means removing transitory goods and housing, and keeping inflation at a rate above 6 %,” he said. ” And the three-month rate is higher than the six-month rate, and the one-year rate is higher than the six-month rate.”
Summers warned that “markets could crash” and that interest rates are likely to rise even higher right now, making it harder for Americans to purchase cars and homes.
Summers said,” This confirms the idea that the neutral rate is way above the 2.6 % level that the Fed has been using as a North Star.” Put back on the table, in my opinion, is still not what I would anticipate, but you must take the possibility that the next rate move will be one of the upward trend rather than the downward trend seriously. And anything could happen, markets could crash, the indicators could turn down. However, a rate cut in June seems to me to be a dangerous and egregious error in comparison to the errors the Fed made during the summer of 2021 because inflation was just not in the forecast.
WATCH:
. @lhsummers, former US Treasury Secretary and Wall Street Week contributor, says he’s not surprised inflation rose again in March, but he says an interest rate cut in June by the Federal Reserve would be dangerous https ://t.co/VVbO71W83N pic. twitter.com/enjnKsEm5Z
— Bloomberg TV ( @BloombergTV ) April 10, 2024
Summers warned last year that Biden’s inflation trend was closely correlated with inflation rates under President Jimmy Carter’s administration and that perhaps America has n’t experienced the worst inflation since then.
In a post on X that included a graph illustrating how inflation under Carter has mirrored inflation, Summers wrote,” It is sobering to note that the shape of the last decade’s inflation curve almost perfectly shadows its path from 1966 to 1976 before it accelerated in the late 1970s.”
The inflation curve of the past decade almost perfectly resembles its path from 1966 to 1976, which culminated in the late 1970s. https ://t.co/UpEk7x6FQt pic. twitter.com/q9PwBRKzxN
— Lawrence H. Summers ( @LHSummers ) August 25, 2023
Virginia Kruta contributed to this article.
