Increasing inflation poses recession threat to US, warns Larry Summers

Washington: Larry Summers, an economist, has warned that unprecedented and rising inflation in the United States and the slide in the stock markets pose a threat of a significant recession in the United States. Summers has functioned as an advisor during the tenure of former President Barack Obama. Therefore, his warning becomes noteworthy. Following the United States, the European countries have also been indicating a slide in the economy. Inflation is scaling record heights in the United Kingdom and Germany, which has raised concerns over the ‘Cost of Living’.

Moreover, fresh information was published in the United States regarding the inflation index. According to that, inflation has reached a record 8.6%. This includes a phenomenal rise in food grain prices, essential daily commodities and fuel. Fuel rates in the United States have scaled a record level of $5 per gallon, a historic increase. There is an increase of nearly 12% in food grain prices and other essential commodities.

Larry Summers warned that considering the factors like unprecedented inflation and increasing unemployment, the United States would have to face a recession in the next two years. The consumer demand for products has reached a record low. The slide continues in the stock market. All these factors indicate that the United States will face a recession next year. Fuel rates are an essential factor for it. Besides, the situation may worsen if the fuel rates rise rapidly. While economist Summers was issuing warnings over the fuel rates, the US stock markets crashed on Monday. The share indices have declined by 20% in the January-June period.

Meanwhile, following the United States, even the leading European economies are receiving jolts. The inflation index has reached 7.9% in Germany. This is a record for the last 50 years. The rising fuel rates are said to have become the leading cause. Fuel rates have increased even in the United Kingdom and responsible analysts have warned that the European countries will face the ‘Cost of Living’ crisis.