The odds of a recession in the next year are 70% and the US has a stagflation problem brewing, former Treasury Secretary Larry Summers says

• The US has a 70% chance of tipping into a recession in the next year, Larry Summers said.
• The ex-Treasury Secretary pointed to rising wages, which attest to stubborn inflation in the economy.
• The Fed is unlikely to get inflation back down to 2% without sparking a slowdown, he warned.

The US has a 70% risk of tipping into a recession within the next year as stagflation is beginning to take shape in the economy, according former Treasury Secretary Larry Summers.

In an interview with Bloomberg on Saturday, Summers pointed to worrisome inflation indicators, such as the Employment Cost Index, which rose 4.8% in the first quarter of 2022. Rising wages are a sign that inflation is still being felt in the economy, and could also worsen the trend and lead to a wage-price spiral, economists say.