Summers: Underlying Inflation Is Worse than What Spurred Price Controls in the ’70s

On Friday’s broadcast of CNN’s “New Day,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers argued that when you remove the volatile parts of inflation numbers to look at the more stable underlying inflation rate, the numbers point to the U.S. “having inflation in the 5% range, which is well above what is acceptable.” And is worse than the inflation that existed when President Richard Nixon implemented price controls in the ’70s.

Summers said there will be “all kinds of fluctuations because gas prices go up, gas prices go down. There [are] other volatile components of inflation. So, what you have to do is look at what the underlying, more medium-term inflation rate is, and that means looking at things like the behavior of wages, that means looking at the median component of inflation, whatever product each month is right in the middle of the distribution, and it means looking at core inflation — so-called core inflation. And I think those statistics are pointing not towards 8 or 9% inflation, but they are pointing towards our having inflation in the 5% range, which is well above what is acceptable. It’s more than the inflation we had when Richard Nixon imposed price controls 50 years ago, and that’s just where we are.”

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