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The Path Forward: The U.S. Economy with Lawrence H. Summers

Former Treasury Secretary Lawrence H. Summers joins Washington Post Live (Video: The Washington Post)
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He is one of the most noted economists in the world and has been a key advisor to the previous two Democratic presidents. Join Washington Post Live to hear former treasury secretary Lawrence H. Summers’ assessment of the U.S. economy and the Biden administration’s efforts to control inflation.

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“I think that the President’s column today in the Wall Street Journal articulated the right, broad principles that inflation is now our preeminent, short-run economic problem. That it has to take priority over other problems, that the first part of any strategy for it has to be monetary policy. That the president has to respect the independence of the Federal Reserve, as the Federal Reserve does what’s necessary to contain inflation. Frankly, it’s been my view that the Fed was way slow to recognize the gravity of the gathering inflation storm, even though there was substantial evidence of it. But I’ve been heartened in recent weeks and even the last several months by Chairman Powell’s statements about the importance and centrality of inflation.” -Lawrence H. Summers (Video: Washington Post Live)
“When inflation’s been above four percent and unemployment’s been below four percent, we’ve always had a recession within the next two years. And right now, inflation is well above four percent and unemployment is, properly measured, well below four percent. So, I think the likelihood is that we’re not going to get through this with a soft landing…Given where we have been, it is going to be very difficult to get through this.”- Lawrence H. Summers (Video: Washington Post Live)
“I do think there needs to be considerable soul-searching at the Fed as to how they missed this as badly as they did. They were declaring that inflation would be transitory through most of 2021, even as it was becoming clearer and clearer to a growing number of observers that inflation was not on a path to being purely transitory. So, I think some review of the modeling and forecasting techniques that the Fed uses is in order and I think it would give confidence that these kinds of mistakes are less likely to be repeated in the future.”- Lawrence H. Summers (Video: Washington Post Live)
“What I’d be watching is what’s going to happen in labor markets. And I don’t think there’s a durable reduction in inflation without a meaningful reduction in wage growth. And right now, with labor markets so tight, I don’t see such a meaningful reduction in wage growth taking place…I would be surprised if this year, like last year, we didn’t have inflation way, way above the two percent target. And it would surprise me if we returned to the two percent target next year.” - Lawrence H. Summers (Video: Washington Post Live)

Lawrence H. Summers

Former Treasury Secretary