Summers: "This Year, 50-50 Chance of US Economic Recession"

Policies on Immigration, Tariffs, and Federal Layoffs
Damaging U.S. Competitiveness

Former U.S. Treasury Secretary Lawrence Summers predicted a 50-50 chance of the United States entering a recession this year.

On the 11th (local time), in an interview with Bloomberg Television, Summers said, "We are dealing with uncertainty, and it will be difficult to resolve." He served as Treasury Secretary under the Bill Clinton administration and as Chairman of the National Economic Council (NEC) under the Barack Obama administration.

Lawrence Summers, former U.S. Secretary of the Treasury.

Summers stated, "The economy will almost certainly slow down more than expected, and there is nearly a 50% chance of a serious recession," pointing out that the Trump administration's immigration restrictions, federal employee layoffs, and tariff policies have combined to significantly alter the national economic outlook by damaging U.S. competitiveness.

Recently, major U.S. banks have also turned pessimistic about this year's economic outlook. JP Morgan raised the probability of a recession from 30% to 40%, Goldman Sachs sharply lowered its economic growth forecast from 2.4% to 1.7%, and Morgan Stanley reduced its growth forecast to 1.5% for this year. Summers commented, "Once revisions start moving in one direction, a trend follows," adding, "Currently, all revisions are moving in the same direction."

However, the Trump administration has stated that it will not rule out the possibility of a temporary economic slowdown to achieve its policy goals. In a Fox News interview on the 9th, when asked if he expected a recession, President Donald Trump did not deny it and responded, "There is a transition period. What we are doing is very significant."

Regarding this remark, Summers noted that the term "transition period" is very similar to "temporary," referencing the 2021 Biden administration's dismissal of rising inflation as a temporary phenomenon. He said, "The idea that this is some kind of transition period is unlikely to hold," adding that current tariff policies raise the cost of raw materials used in American factories, resulting in counterproductive effects.

The U.S. Federal Reserve (Fed) is scheduled to make an interest rate decision on the 19th. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market estimates a 96% chance that the Fed will hold rates steady this month. Summers said, "The Fed needs to emphasize the impact of uncertainty on the economy," and "It should also point out that its ability to respond to uncertainty is very limited." He further noted that if economic growth is hit by corporate uncertainty about economic policies and household concerns about social security, the Fed's rate cuts may not significantly help stimulate growth.

This content was produced with the assistance of AI translation services.