Harvard University economist Lawrence Summers hasn’t been this worried about the economy since the financial crisis
By Dan Weil Sept. 8, 2019 10:13 pm ET Harvard University economist Lawrence Summers sees economic danger ahead.
A Treasury secretary under President Clinton, an economic adviser to President Obama and a former president of Harvard, Mr. Summers doesn’t anticipate an economic nosedive. But he says he sees a nearly 50% chance of a U.S. recession before 2021. Despite healthy consumer spending and a resilient stock market, he sees threats from weakness in the U.S. industrial sector, the fragile global economy and trade tension.
At the same time, he says, the negative real long-term interest rates that prevail throughout major industrialized nations will leave central banks with little weaponry to fight economic weakness and could create a “black hole” where both economic growth and inflation stay very low.WSJ: How likely is it that the U.S. economy enters recession within the next year?
MR. SUMMERS: I haven’t been this alarmed since the financial crisis. That reflects the length of the expansion; the fact that we’re starting with very low unemployment; market indicators, particularly the yield curve; the weakness of the industrial sector; the susceptibility of the global economy to geopolitical shocks; uncertainties associated with trade conflicts that seem ubiquitous; and a growing deflationary specter outside the U.S.
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