1 MIN READ - In light of today’s super-strong jobs report (312K jobs added versus 177K expected), the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff is reminded of former Clinton administration Treasury Secretary, Harvard President, and World Bank Chief Economist Larry Summer’s economic predictions made during the 2016 presidential campaign.
Yes, Larry Summers predicted in June 5, 2016’s Washington Post that a Trump election victory would bring a “protracted” global recession within eighteen months.
Whether he meant eighteen months after a November 8, 2016 election or eighteen months after a January 20, 2017 inauguration isn’t entirely clear. But taking Summers verbatim at his word (“if he [Trump] were elected, I would expect a protracted recession to begin within 18 months) we have to go with election day.
Eighteen months later was May 8, 2018 so Summers was wrong plus another seven months to boot and counting.
Now all that said, the Economics Correspondent still worries about recession. One day there will inevitably be one, and the Federal Reserve is working overtime to create one even if the Fed governors may not understand completely how their imposition of price ceilings on savings and capital sets up the U.S. economy for booms and inevitable busts.
(On a side note, the Economics Correspondent was worried all the way back in mid-2016 about a Fed-induced recession during a Trump presidency and actually advocated to his friends that a Hillary Clinton presidency with an obstructionist GOP Congress might be a better long term scenario since the Fed would dump a recession in Hillary’s lap instead… OK, say ten Hail Marys and I’m forgiven)
But regardless of what the Fed does going forward Summers’ hourglass sands have run out. Like most statist Keynesians he’s made yet another wrong prediction—this one particularly alarmist and designed to frighten voters into choosing his candidate.
And I thought it was Trump who fosters fear for political gain.
Eighteen months have come and gone and there’s no protracted global recession now nor was there one any time leading up to and including May 8, 2018.
So tally up yet another dead wrong prediction by a Keynesian economist joining the likes of Paul Samuelson, Arthur Okun, Alvin Hansen, Joan Robinson, Joseph Stiglitz, Ben Bernanke, Paul Krugman, and of course John Maynard Keynes himself.
ps. If a recession does begin in the next six months or year and the culprit is the Fed's tightening of monetary policy after eight years of distortive zero percent interest rates, don't expect Summers to make that differentiation. Neither I'm sure will the mainstream media.
pps. LOL from Summers' June 5, 2016 Washington Post opinion piece:
"Trump’s authoritarian style and cult of personality surely would take a toll on business confidence."