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00:00A good part of the week this week was given over to talk about recession on the one hand and inflation on the other we heard from Fed Chair Jay Powell for two straight days up on Capitol Hill. Let me ask you the most basic question as you look forward to the economy. What do you think the biggest risk is right now we face. Look I think David that a recession is almost inevitable. Probably a 75 percent 80 percent chance within the next two years and there's certainly a real risk that it will come sooner. That's going to be a very difficult thing though as I say I think it may be inevitable given where we are. Well I think it's going to be very important to make sure that if we're going to go through a period of pain we do slay the inflation dragon. You know there have been many failures particularly the 1970s are the classic example of where economic policymakers did the equivalent of stopping their antibiotic when they felt better. But before the 10 day dose was through. And so it's a very very difficult set of balances and challenges that the Fed is going to have. And I very much hope that they make wise choices. So I take your point that the only thing worse than having a recession is having one without slaying the inflation dragon is is that. But let me ask you at this point some people are predicting this will be a fairly short and shallow one. Do we have reason to believe that. I hope they're I hope they're right. The question is going to be how much recession do you how much recession is going to be part of eliminating inflation. And that goes back to the whole debate about team transitory. If most of inflation is transitory then we're not going to have to live with very much pain to get the inflation out of the system. If more of it is more ingrained then we're going to have to live with more difficult. The I was mildly encouraged by the number that came out today suggesting that long term inflation expectations as measured in Michigan had gone up a little less than people originally thought. But I still do think we have a meaningful amount of inflation that we have to get out of the system. And I don't think we're going to do that in one or two quarters of economic slack. But look there is no reason why this needs to resemble the recessions of the last generation. This should not be anything like what happened after Covid. This should not be anything like what happened after the great financial crisis. Just how deep just how long. It will be difficult to know. But most people remember the last two recessions and I don't see any reason why we're headed for difficulties of that kind.

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Larry Summers: A Recession Is Almost Inevitable

Former Treasury Secretary Lawrence Summers says a US recession is almost inevitable. He says if we're going to go through a period of pain, we have to "slay the inflation dragon." He spoke to David Westin on "Wall Street Week." (Source: Bloomberg)

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