Heavyweight economist Larry Summers has often warned about the potential for an upswing of inflation, even as it’s been falling.

“My own judgment is that the Fed and markets are still underestimating the overheating risk,” Summers said during an appearance at the New York Economic Club, according to CNN. “I ask myself: Why is cutting rates a priority in that environment?”

Summers pointed to the differences between headline inflation — the overall number — and core inflation, which excludes the often volatile food and energy categories. Core inflation has been significantly higher. The Consumer Price Index (CPI) saw the October headline number increase to 2.6% year-over-year from September’s 2.4%. October’s core inflation was 3.3%.

Or look at the Personal Consumption Expenditures (PCE), the Federal Reserve’s preferred measure. The latest numbers came from September. Headline year-over-year inflation was 2.1%, with core at 2.7%.

Still, the Fed cut 25 basis points from the federal funds rate in November after the 50-basis-point cut in September. Summers wonders if the central bank will repeat 2021’s “huge error” of allowing inflation to race upwards while calling it transitory and waiting for it to naturally abate.

“I am fearful that the Fed is going to be more like once burned, twice burned, rather than once burned, twice shy, on inflationary risks,” Summers said. In addition to core inflation, he pointed to high economic growth and financial markets that are “on fire.”

Economic growth in 2023 expressed by the St. Louis Federal Reserve’s FRED data repository as real year-over-year change in GDP —taking inflation into account — was just under 2.9%. That is roughly in keeping with more stable periods of growth and well under spikes of growth going back to 1948. In 2024, according to the Bureau of Economic Analysis, the first quarter saw real annualized GDP growth of 1.6%. In Q2, it was 3%, and 2.8% in Q3. That doesn’t seem high.

As for fiery financial markets, the S&P 500 has been on a sharp growth stretch, measured as percentage change year-over-year, since the beginning of 2023. Add the movement of the 10-year Treasury yield, growing from 3.62% on September 16, 2024, and closing at 4.44% on Wednesday, November 13, 2024. Looking at hedge advisory firm Derivative Logic’s forward projection of yields based on standard mathematical formulas, this is a level that shouldn’t be seen until May 2026.

Derivative Logic managing director Carol Ng has told GlobeSt.com since September that markets are showing high volatility.

"The 10-year shouldn't be this volatile," Ng explained. "That's a reflection of the instability, not just in the US and world economy, but all the outlying factors. I think we'll have a lot of outlier events that will come out of the woodwork.”

The consequences of Donald Trump winning the election is one of those factors. His plans for tax cuts could have big effects on the economy, said the Committee for a Responsible Federal Budget, increasing the national debt by a range from $1.65 trillion and $15.55 trillion with a central estimate of $7.75 trillion. The high tariffs he’s called for would be an effective tax on imports paid by recipients and then passed on to business and consumer customers, driving prices up and potentially increasing inflation.

And so, the futures of inflation, interest rates, growth, and commerce are cloudy.