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Transcript: Summers Says Recession More Likely Than Soft Landing

The former Treasury secretary tells Bloomberg’s Stephanie Flanders why he thinks the Fed made mistakes and how inflation can be better fought.

The Marriner S. Eccles Federal Reserve building in Washington. Federal Reserve officials laid out a long-awaited plan to shrink their balance sheet by more than $1 trillion a year while raising interest rates “expeditiously” to counter the hottest inflation in four decades.

The Marriner S. Eccles Federal Reserve building in Washington. Federal Reserve officials laid out a long-awaited plan to shrink their balance sheet by more than $1 trillion a year while raising interest rates “expeditiously” to counter the hottest inflation in four decades.

Photographer: Tom Brenner/Bloomberg

Larry Summers is at it again. The coal mine-canary is warning of recession as the Federal Reserve tries to curb inflation without triggering a slump.

For now, economists put the chance of a recession developing over the next year at 27.5%, according to a Bloomberg survey earlier this month.  Still, the downbeat call by the Harvard professor, former Treasury secretary and paid Bloomberg contributor isn’t easily dismissed even by optimists. Summers famously cautioned that the federal government was being overly generous with its Covid-19 bailout payments earlier in the pandemic, and he dismissed the idea that inflation would be “transitory” well before it was fashionable.