Former U.S. Treasury Secretary Sanmers
Former U.S. Treasury Secretary Sanmers said in an interview with the media that he believes that the US economy has not yet entered a recession, but the chance of falling into a recession in the next year and a half is 75%.
Sanmus said in an exclusive interview: I don’t think it is in recession now. However, based on the difficulty of suppressing high inflation and the necessary monetary policy response, the probability of the economy entering a recession within the next 18 months is quite serious, perhaps in the three-quarters spectrum. If the U.S. economy turns into a situation where the unemployment rate rises, the unemployment rate will rise sharply. I think the unemployment rate will exceed 6% in the next two or three years.
Official data released last week showed that the gross domestic production in the United States in the second quarter shrank by 0.9% after adjusting for inflation and seasonal factors and converting the adult rate, continuing the shrinkage of 1.6% in the first quarter. GDP shrinks for two consecutive quarters, which meets the definition of a technical recession.
But the Biden administration stressed that the formal determination agency for the recession is the National Bureau of Economic Research, defined as a sharp decline in the economic prosperity and spanning all levels of the economy and lasting more than several months.
When the U.S. growth slows down, the Fed will continue to raise interest rates to curb inflation. Several officials reiterated Fed's determination to break inflation this week.
Sanmus' view is that even if growth slows down, the brakes of tightening monetary policy should still be put to the end in order to cool down inflation .
He said: If the economy looks slowing, stopping raising interest rates may be an attractive idea, and market participants do expect interest rates to drop from December or January. I think that would be a serious mistake.
Sanmers believes that due to strong U.S. economic growth last year, inflation and supply chain problems will stay for a while, and it will be another matter unless the recession is coming. He said: I think that at some point, there must be some degree of recession, and in addition to this, inflation is unlikely to return to the target level.
