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There is “no precedent” for correcting inflation in an economy that has overheated without a recession


On Friday’s Bloomberg “Wall Street Week” show, Steve Rattner, who served as an adviser to the Treasury Secretary in the Obama administration, said history “is not on the side” of a soft landing that keeps inflation under control without triggering a recession. because there is “no precedent” for fixing inflation in an economy as overheated as the current recession-free economy. He also said that economics is not the kind of science that can provide the level of precision needed to avoid a recession.

Rattner said: “I am not at all in the camp of those who think that a recession is likely this year or probably even in the second half – or the first half rather, of next year. But, at some point, anyone can guess whether we’re going to get through this without a recession. »

He added: “History is not on the side of a soft landing. There really is no precedent for bringing such an overheated economy, with inflation – whether transitory, permanent, or otherwise – coming down at this rate to something close to 2% without there being a recession. . It would take the skills of the most experienced pilot in the world to pull off that kind of soft landing. We really need to calm down the demand. You have to, unfortunately, increase the unemployment rate, make the job market slack, and it’s a level of precision that, economics is a kind of science, but it’s not that kind of science.

To follow Ian Hanchett on Twitter @IanHanchett


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