Contrary to the Biden administration's narrative, Economist Larry Summers says that there is not a whole lot of evidence of a downward trend in inflation.
Summers said as much on Friday during an appearance on Bloomberg's Wall Street Week.
During his Bloomberg appearance, Summers said that he has not seen much evidence of a downward trend in inflation.
"I think more broadly, it seems to me that we don’t have a lot of evidence of a basic downward trend in inflation," Summers said.
Summers continued by stating that, to him, it seems "more like the inflation story is fluctuation around an underlying inflation rate of 4.5 or 5." And, Summers opined that, if this figure is correct, "it suggests that the Fed has considerably more work to do.”
Accordingly, Summers went on to predict that "there’s a quite good chance that we’re going to need to get to a terminal rate near 6."
After all, we have inflation running at close to 5% and we have interest rates at about 5%. And so, interest rates and inflation in the same range doesn’t point to a lot of pressure to bring inflation down. So, I’m very much open to changing my mind and I think confident pronouncements about these things are a mistake.
For those unfamiliar with Summers, suffice it to say that he isn't a conservative. Summers, an economist and Harvard Professor, was the Treasury Secretary in the administration of former President Bill Clinton. And, he served as the Director of the National Economic Council in the administration of former President Barrack Obama.
There is no doubt that what Summers said during his Bloomberg appearance is not the sort of thing that President Joe Biden and the Democrats want to be telling the American people.
Biden is expected to seek reelection in 2024, although he has yet to officially announce his candidacy. And, Biden has already begun trying to claim that his administration has been successful economically as a result of such measures as the Inflation Reduction Act.
In conjunction with his recently proposed budget, for example, the White House released a statement, saying:
President Biden has long believed that we need to grow the economy from the bottom up and middle out, not the top down. Over the past two years, in the face of significant challenges, that economic strategy has produced historic progress for the American people.
As Summers pointed out, however, this is simply not the reality of the situation.