Former U.S. Treasury Secretary Larry Summers said the latest U.S. inflation data was encouraging and that a recession may occur later than thought.

(Reuters file photo)

[Financial Channel/Comprehensive Report] Former U.S. Treasury Secretary Lawrence Summers said that the latest U.S. inflation data is encouraging, and the recession may also occur later than thought.

"The situation is better than I thought, the numbers (November consumer price index) are good, and it does look like it (the recession) has been delayed a little bit in time," Summers said, according to Bloomberg.

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He also warned that when a recession does come, policy makers will face a rapid weakening of the labor market and a decline in the stock market, which may last longer and happen faster than imagined.

Summers said that part of the reason why employers retain employees is that they are worried about labor shortages caused by the outbreak and it is difficult to fill manpower vacancies. However, if the labor market begins to relax, this state of hoarding manpower may suddenly change drastically.

Summers added that when the economy is in recession, weaker corporate earnings will be the focus of stock market investors and have a negative impact on the market.

He reiterated the risk of consumer spending plummeting as the cartoon character Wile E. Coyote falls off a cliff when household savings run out.

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