Former US Treasury Secretary Larry Summers stated in an interview this week that the possibility of an economic recession is very real, which was unimaginable just a few months ago.

He pointed out that at the beginning of the year, the market generally expected the US economy to remain resilient, but the economic outlook has undergone significant changes due to the policy uncertainty of the Trump administration.

On January 1st, no one believed that the possibility of an economic recession was high, but today, market prices and the consensus among economists indicate that the risk of an economic recession is very real. "- Larry Summers, former US Treasury Secretary

Summers emphasized that the Trump administration's tariff policies have had a dual negative impact on the economy: on the one hand, they have suppressed demand, leading to reduced investment by businesses; On the other hand, some companies and consumers purchase goods in advance due to concerns about future tariff increases, resulting in "fearful expenditures".

This is basically self inflicted harm. "- Larry Summers, former US Treasury Secretary

Enterprise investment confidence damaged, market volatility intensified

Summers believes that the Trump administration's "counterproductive" economic policies are damaging market confidence. The frequent adjustment of tariff policies has led to great uncertainty for enterprises in decision-making, resulting in a decrease in capital expenditures and affecting the overall economic growth prospects.

In addition to the enterprise level, the consumer confidence index has also fluctuated, and some groups have reduced their large consumption and investment due to concerns about the economic outlook. Meanwhile, market data shows that since February, the market value of the equity market has evaporated by over $4 trillion, and the turbulence in the financial market reflects investors' concerns about the economic outlook.

When Trump was sworn in, many people expected the economy to be strong and the undercurrent of American exceptionalism to be strong. But due to all the uncertainty, the situation changed dramatically. "- Larry Summers, former US Treasury Secretary

Safe haven demand drives up gold prices, investors seek to hedge risks

Against the backdrop of increasing economic recession risks, the attractiveness of safe haven assets has significantly increased, and gold prices continue to strengthen, approaching a new high since 2025.

Market analysts point out that investors are seeking to hedge against the risks brought by the economic downturn, and the weakening of the US dollar and the rising market risk aversion have further driven up the price of gold.

The uncertainty in the market is driving safe haven funds into gold, and investors hope to protect their assets through gold. "- Mark Thompson, senior Wall Street analyst

As the Federal Reserve may adjust its monetary policy in the future to address the dual challenges of inflation and economic slowdown, gold prices may remain strong in the short term.

Editor's viewpoint:

The biggest challenge currently facing the US economy is policy uncertainty. The frequent adjustment of tariff policies not only affects global trade, but also undermines business investment confidence, further dragging down economic growth expectations.

Larry Summers' warning reflects the real concerns of the market about economic recession, while the continued decline in the equity market and the rising trend in gold prices indicate that investors are adjusting their asset allocation to hedge against the risk of economic recession.

If trade concerns do not ease in the coming months, the US economy may face greater growth pressure.