Summers: Many 'Special Factors' in Inflation Numbers, Some Will Reverse, We Still Have 'Strong Wage Inflation' and Are Not Reaching Target

During an interview aired on Friday’s broadcast of Bloomberg’s “Wall Street Week,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers stated that while the October inflation numbers were good, “there were a lot of special factors in these numbers, some of which will be reversed.” There is still “strong wage inflation. And I don’t see a way, as long as inflation is running in the 5, 6 range that we’re getting to target.” Summers said, “I think they were good numbers, but one number is never decisive. And there were a lot of special factors in these numbers, some of which will be reversed. As always, team transitory only focuses on the things that are likely to come down in the future, not the things that are likely to go up in the future. I don’t think apparel prices will keep going down so fast. I don’t think we’ve really got structural disinflation in medical care. But this was a good number and the market was right to respond positively. Whether the magnitude of the reaction was right, I think that’s very much in question.

There was another number yesterday, which was the Atlanta Fed number on wages, and that was showing continued strong wage inflation. And I don’t see a way, as long as inflation is running in the 5, 6 range that we’re getting to target. So, I think the people who declared victory on the basis of this number yesterday were overreacting. But, look, it certainly was an encouraging number. But we had similar encouraging numbers in March and similar encouraging numbers in July and one swallow didn’t make a spring then.” Follow Ian Hanchett on Twitter @IanHanchett.

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