The Economics Show Martin Wolf interviews Larry Summers: Is Trump a threat to the US economy?
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Dec 10, 2024 
Larry Summers, former US Treasury Secretary and President Emeritus of Harvard, shares his insights on the economic risks posed by Trump’s policies. He discusses the potential inflationary effects of tax cuts and trade tariffs. Summers highlights public discontent with the Biden administration despite low unemployment. He draws parallels to Nixon's era, emphasizing threats to the Federal Reserve's credibility and the rule of law. The conversation navigates the disconnect between economic data and voter sentiments, warning of electoral repercussions for progressive leaders.
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Voter Discontent
- Voters felt the Biden administration was out of touch with cultural norms and economic realities.
- Inflation and cost of living were primary concerns, overshadowing other issues like abortion or immigration.
Inflation Drivers
- Nominal GDP growth outpaced real economic growth potential, indicating substantial inflationary pressure.
- This was driven by monetary and fiscal policies that increased total spending.
Disinflation Progress
- Disinflation has been more successful than anticipated, with less disruption to output.
- However, underlying inflation remains a concern, requiring continued caution from the Fed and the next administration.