The U.S. will likely enter a recession within the next two years, former U.S. Treasury Secretary and Obama administration adviser Larry Summers told CNN's "State of the Union" on Sunday.
Why it matters: Soaring inflation poses a huge challenge to the Biden administration and is souring Americans' views of the economy.
The big picture: Summers said he disagreed with current Treasury Secretary Janet Yellen's assessment at a forum Thursday that there's "nothing to suggest a recession is in the works.”
- "I think when inflation is as high as it is right now, and unemployment is as low as it is right now, it's almost always been followed within two years by inflation, by recession," Summers said.
- "I think there is certainly a risk of recession in the next year. And I think given where we've gotten to, it's more likely than not that we'll have a recession within the next two years."
- "That is something we can manage. We've had them for the whole history of the country. We need to be prepared and to respond quickly if and when it happens," he added.
Driving the news: The government's May inflation report, released Friday, showed the Consumer Price Index rose 1% last month, and has accelerated by 8.6% from May 2021, Axios Courteney Brown writes.
- The report means the Federal Reserve will likely have to take more aggressive steps to cool demand to tackle inflation, which amplifies the risk of a sharp economic downturn.