WASHINGTON (NEXSTAR) — The Biden administration is facing growing worries from economists who fear rising inflation could trigger a recession.
Americans continue to face rising prices, from groceries to the pump. US inflation hit 7.9% in February, a new 40-year high
Economists are divided on whether the Biden administration can turn things around before it’s too late.
Former Treasury Secretary Larry Summers said Americans may need to prepare for a recession as early as next year.
“The painful fact is…that historically when we’ve had inflation above four…and we’ve had employment below four since World War II which was followed by a recession,” he said on NBC’s Meet the Press.
Summers worked for former President Bill Clinton, a Democrat. But Summers told NBC’s Meet the Press that he agrees with Republicans, who blame Democrats’ multibillion-dollar spending bills for soaring prices.
“We’re injecting too much demand into the economy,” Summers said.
Summers said the only hope is that the Federal Reserve can find a way to raise interest rates and moderately slow business investment and consumer spending.
“It won’t be easy,” Summers said.
On CBS’ Face the Nation, Loretta Mester, chairwoman of the Cleveland Federal Reserve, said she was confident consumers would get a break next year.
“I think inflation will stay above 2% this year and even next year, but the trajectory will drop after that,” Mester said.
On Fox News on Sunday, White House press secretary Jen Psaki said the Biden administration was working to tackle historic inflation.
“(We will) continuously monitor our economic data,” Psaki said.
But she said many Americans still need help recovering from the pandemic. The Biden Administration extended federal pause on student loan repayments until August last week.
Senate Minority Leader Mitch McConnell, R-Ky., told Fox News that delaying payments only adds fuel to the fire.
“It’s exactly the wrong thing to do,” McConnell said. “This administration just can’t get its act together on the economy.”
The federal government will release March inflation figures on Tuesday.