Former Treasury Secretary Lawrence Summers believes the probability of the United States entering a recession has spiked, pointing to tightening credit conditions.
“Recession probabilities are going up at this point,” Summers said in an interview with Bloomberg. The U.S. economy averaged 345,000 monthly job additions in the first quarter of 2023 while the unemployment rate fell to 3.5 percent in March, indicating a robust economy. However, Summers discounted the report, stating that it only reflected the nature of the economy from the first quarter.
Now, the data is less relevant due to the prospects of a credit tightening, he said. “We’re getting a sense that there is some substantial amount of constriction in credit.”…