Larry Summers says he’s ‘still cautious’ but has a ‘little bit more hope’ about economy

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Former Treasury Secretary Larry Summers said in a recent interview that the "situation does look a bit better" for the U.S. economy.

Summers told Bloomberg in a video posted Wednesday that he’s "still cautious" but added that he has a "little bit more hope" than he previously had. The comment came in response to a question about his current view on inflation and the U.S. economy’s risk of entering a recession. 

Soft landings, he said, are the "triumph of hope over experience." However, he noted that "sometimes hope does triumph over experience."

Larry Summers (Jim Davis / The Boston Globe via Getty Images / File / Getty Images)

"We have seen some slowing of inflation indicators," said Summers, who has held positions in the Clinton and Obama administrations. "At the same time, we’ve seen continued strength. That’s got to be what we all want to see."

FED MAY NEED TO HIKE INTEREST RATES ABOVE 6% TO CRUSH INFLATION, LARRY SUMMERS SAYS

In December, gauges of consumer and wholesale inflation both saw declines from the previous month, according to the latest data released by the Labor Department.

The Consumer Price Index saw a 0.1% month-over-month drop and a 6.5% year-over-year increase, the department said last week. On Wednesday morning, data showed the that Producer Price Index went down 0.5% on a monthly basis and rose 6.2% on an annual basis.

WHOLESALE INFLATION TUMBLED 0.5% IN DECEMBER, MORE THAN EXPECTED

Summers went on to say that he still thought "it’s going to be hard," explaining that the U.S. economy "still need[s] a substantial amount of disinflation that goes beyond volatile components receding." He also acknowledged that "the figures are better than someone like me would have expected three months ago."

"It’s still a very, very difficult job for the Fed, but the situation does look a bit better," he said.

Larry Summers is interviewed by FOX News’ Maria Bartiromo on May 24, 2017, in New York City. (Robin Marchant / Getty Images / File / Getty Images)

Former Treasury Secretary Larry Summers visits FOX Business Network on Jan. 30, 2015, in New York City. (Rob Kim / Getty Images / Getty Images)

The Federal Reserve increased interest rates multiple times in 2022, including four back-to-back 75-basis-point hikes and, most recently, a 50-basis-point lift. In the minutes of the central bank's December meeting, policymakers indicated that rates could go up to 5.1% in 2023, as previously reported by FOX Business.

The Bloomberg interview with Summers took place in Davos, Switzerland, where the World Economic Forum (WEF) is currently hosting its annual meeting of heads of state and business leaders.

GLOBAL RECESSION LIKELY, SAY 63% OF CHIEF ECONOMISTS IN WEF SURVEY

In the WEF’s Chief Economists Outlook survey released Monday, more than three quarters of the chief economists surveyed said they expected moderate inflation in the U.S. in 2023 while 24% said it would be high. A majority, 55%, projected the U.S. would experience monetary policy tightening.

Megan Henney contributed to this report.

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