“I still think the Fed and most market participants are underestimating the gravity of our situation,” Summers El-Erian
Risk of US Unemployment Needing to Climb Toward 6%
“I would be very, very surprised if we saw inflation come down to 2.5% without also having seen a recession,” Summers also said.
The more likely scenario is that the recession won’t bring consumer-price gains “all the way down” to 2.5% -- “that’s why I think the central tendency is towards stagflation.”
Bloomberg 17 June 2022
This is not a cyclical phenomenon
It is a secular regime change forced on reluctant central banks by inflation that has got well ahead of them and threatens livelihoods, worsens inequality and undermines financial stability.
As it is late, this shift comes with a heightened risk of collateral damage and unintended consequences.
Mohamed El-Erian FT 20 June 2022
https://www.ft.com/content/77665e8d-e3bb-4fc7-8547-b368c8b90f47
What is stagflation, and might it make a comeback?
A combination of inflation and sluggish growth brings memories of the 1970s
The Economist explains 16 June 2022
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