YouTube (via Bloomberg)
Summary:
- Larry Summers sees recent cooling in employment data as a positive on inflation, with job vacancies falling more than expected and wage growth cooling more than expected.
- Still sees high risks to the soft landing, and cautions not to read too much into a single data point.
- Summers sees “labor restiveness” as an unknown factor that could continue to drive inflation over the longer-term.
Full Synopsis:
Speaking on Bloomberg, Larry summers noted that recent jobs data was consistent with more optimistic scenarios in the economy, although he warned that “the road to a soft landing is still a difficult one.” Summers noted that although the Jobs numbers are good and the economy still looks strong, wage growth was lower than expected pointing to a soft landing scenario. However, Summers warned that it was a mistake to “make judgements based on one number,” and that the road to a soft landing was still a difficult one.
Summers continued to caution about the state of wages in the us, commenting that “As I look to the wage picture, I see a degree of labor restiveness that we have not seen in a long time” indicating there are still longer-term risks to inflation from increased wages as a result of recent bargaining agreements. Summers cited the Hollywood writers and actors strike, the wage settlement at UPS, and ongoing the autoworker negotiations. Summers cautioned that how the inflation pressures could work through the economy is still an unknown and could have upside risks to inflation.
Summers was also somewhat critical of the US government, saying that partisan fights in the US capitol have led to difficulty creating sustained and coherent support for trade agreements.
