Former Treasury Secretary Lawrence Summers warned that America is increasingly likely to slip into recession due to escalating tariffs — potentially costing 2 million jobs nationwide.
“It’s more likely than not that we’re going to have a recession — and in the context of a recession, we’ll see an extra 2 million people be unemployed,” Summers said during an appearance on Bloomberg Television’s “Wall Street Week” with David Westin on Tuesday.
Summers, who served in the Clinton and Obama administrations, further warned that average American families could lose upward of $5,000 in household income.
Summers said there were critical decisions looming in the near future regarding President Trump’s proposed tariff increases, suggesting these tariffs could mirror or even exceed those of the 1930 Smoot-Hawley tariffs, which have historically been blamed for deepening the Great Depression.
“It would be wise to be backing off the policies that have been announced,” recommended Summers, who serves as a professor at his alma mater, Harvard University.
Markets have been notably volatile, reflecting uncertainty and investor anxiety about these trade policies.
US stocks climbed early Tuesday on hopes of progress in trade negotiations, with Treasury Secretary Scott Bessent suggesting the Trump administration could strike “some good deals,” even as China vowed to “fight to the end” in response to escalating tariffs.
The Dow surged over 1,000 points before retreating, while tech stocks led a volatile session after reports confirmed new tariffs on China were taking effect.
Despite brief optimism, market gains cooled as tensions between the US and China deepened, raising fears of a prolonged trade war.
Summers pointed out that stocks spike sharply at even minor indications of tariff relief but plunge dramatically whenever tariffs appear likely to move forward.
“We’re very likely, in the context of a recession, to see markets reach levels significantly below their current level,” Summers warned.
Goldman Sachs, among other prominent investment banks, has echoed these recession concerns.
Goldman recently adjusted its recession probability from 35% to 45%, marking its second upward revision within a week.
Initially, the investment bank increased its projection from 20% to 35%, anticipating that the administration’s planned tariffs could severely disrupt the global economy.
Such widespread apprehension has spurred other major banks to increase their forecasts as well.
JP Morgan Chase has raised its estimates dramatically, placing the chances of a recession both in the US and globally at 60%.
Their economists highlight fears that American tariffs may stoke inflation domestically and provoke retaliatory actions from other nations, notably China, which has already signaled countermeasures.
Furthermore, Goldman Sachs has reduced its forecast for US economic growth in 2025 from 1.5% to 1.3%, although this remains slightly more optimistic than the 1% projection issued by Wells Fargo Investment Institute.
JP Morgan Chase, meanwhile, predicts even harsher conditions, anticipating a 0.3% contraction for the upcoming quarter.
In contrast, Morgan Stanley maintains a more cautious stance.
While recognizing recession risks, the bank stated in a recent report that a recession is not its baseline expectation, yet acknowledged it is becoming an increasingly plausible downside scenario.
The Post has sought comment from the White House.
