“One has to be careful of false dawns,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “I would stick with my view that a recession this year is more likely than not.”
The Fed’s job in raising interest rates to damp inflation is now approaching an end, Summers predicted.“It’s a little bit premature at this point to be thinking about pausing, but we’re getting much closer to that day,” he said. But “I don’t think we have to make a definite decision beyond February” at this point, he said.
A key gauge to monitor will be the employment cost index for the final quarter of the 2022, Summers said. The ECI — a broader measure of labor costs than the monthly hourly earnings indicator — is the “gold standard” of such indicators, he said.