"Recession is approaching": Larry Summers' prophecy is about to come true

“A recession is likely in a year or two.” This prediction must be taken seriously. It comes from the most authoritative expert who anticipated current inflation, the one who warned America when its central bank was still underestimating and minimizing price increases.

He is Larry Summers, a Harvard economist, former Secretary of the Treasury of Bill Clinton, former economic adviser to Barack Obama.
Summers refers to America, but there is an old saying: when the US economy cools, pneumonia is on its way to Europe.

Summers bases his prediction on a wealth of historical data and experience: “When inflation is above 4% and unemployment below 4%, historically we have always had a recession.”

The US price index rose 8.6% and the unemployment rate was 3.6%, close to full employment before the pandemic.

Nations that have limited exports

On the other side of the planet, some are working to accelerate the fulfillment of the American economist’s prophecy. India with its wheat, Indonesia with its palm oil and Malaysia with its poultry are 3 cases of nations that have limited exports.

It seeks to protect domestic consumers from the steep rise in grain prices caused by Vladimir Putin’s blockade of Ukrainian exports. Scarcity spreads from one sector to another, as does growth, and the likelihood of a recessionary reaction increases.

Summers criticized the Federal Reserve and the Biden Administration, challenging the need for a third pandemic aid package for families and businesses. According to him, it was not necessary because the American economic recovery had already begun in January 2021, when Biden took office at the White House.

In the rest of the world, price tensions have been exacerbated by the well-known problems of production and logistics chains, exacerbated by repeated blockages in China.

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