former Minister of Finance Lawrence H Sommer believes it will take a long time to get inflation where it is federal reserve would like it to be so and that it would be a little more sustainable than expected.

“The labor market is strong and we are still in unprecedented territory in terms of the gap between vacancies and jobs. That tells you we still have a long way to go to get inflation where the Fed wants it to be,” Summers said in one interview with Bloomberg Television.

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The former finance minister provided an airport analogy to explain how economic forecasts tend to behave.

“Each time they have revised their inflation forecast upwards, they have also revised upwards their forecast for ultimate unemployment. My goodness, we were all at the airport. They say it’s at 7:30. Then they say it leaves at 8:30 a.m., and then they say it leaves at 9:30 a.m.,” Summers said.

“And when I see that, I think it’s about 11. That’s pretty much how it is with these economic forecasts. So I hope I’m wrong. But I have a feeling inflation will be a bit more sustainable than what people are looking for.”

Last week, major Wall Street indices posted losses as the central bank forecast next year of rate hikes with no cuts through 2024. Recession fears following a fall in retail sales also took their toll. That SPDR S&P 500 ETF Trust SPY lost over 2% in the last five days during the Vanguard Total Bond Market Index Fund ETF BND gained 0.31%.

Unemployment: Summers explained how negative situations tend to have an accentuated effect. “There’s this suggestion – it’s called Sahms Rule. It is said that if the unemployment rate increases by half a percent, it increases by more than 2%. Because as soon as you get into a negative situation, there is an avalanche aspect. I think we have a real risk that that will happen at some point,” he said.

He said it’s a lot harder…