On Friday’s broadcast of Bloomberg’s “Wall Street Week,” Steve Rattner, who served as counselor to the Treasury Secretary in the Obama administration, stated that history “is not on the side” of a soft landing that brings inflation under control without causing a recession because there’s “no precedent” for fixing inflation in an economy as overheated as the current economy is without a recession. He also stated that economics isn’t the kind of science that can provide the level of precision avoiding a recession will take.
Rattner said, “I’m not at all in the camp of those who think that a recession is likely this year or probably even the second half — or first half rather, of next year. But, at some point, it becomes anybody’s guess whether we’ll get through this without a recession.”
He added, “History is not on the side of a soft landing. There’s really no precedent for bringing an economy this overheated, with inflation — whether it’s transitory, permanent, or whatever — running at this rate down to anything that looks like 2% without there being a recession. It would require the skill of the most experienced pilot in the world to achieve that kind of a soft landing. You have to really cool off demand. You have to, unfortunately, raise the unemployment rate, get some slack into the labor market, and that’s a level of precision that, economics is sort of a science, but it’s not that kind of a science.”
Follow Ian Hanchett on Twitter @IanHanchett