Answer to inflation – layoffs: Dem $$ big

Ex-Treasury Secretary Larry Summers is warning that millions of currently employed, hardworking Americans must lose their jobs over the next several years in order for the Federal Reserve to cool inflation.

Summers, a prominent Democratic economist who currently has the ear of President Biden, said the national unemployment rate will likely have to rise far above its current level of 3.6% in order to bring down steep prices.

Put even more bluntly, Summers’ grim forecast means roughly 10 million Americans would have to be unemployed to get the worst inflation in 40 years under control.

“We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” Summers said Monday in a speech in London, according to Bloomberg. “There are numbers that are remarkably discouraging relative to the Fed Reserve view.”

The Fed last week hiked its benchmark interest rate by threequarters of a percentage point for the first time since 1994. The move exacerbated concerns about its ability to bring prices down without upending the labor market or triggering a recession.

The central bank currently projects that inflation will return to the approximately 2% level it deems acceptable by 2024, even as Fed Chair Jerome Powell warned that “further surprises” could be in store in the coming months. The Fed expects the unemployment rate to tick slightly higher to about 4.1% in 2024 — well below the bleak level of which Summers warned.