The world economy is showing signs of a rapid downshift as it contends with a series of shocks — some of them self-inflicted by policymakers — increasing the likelihood of another global recession and the danger of major financial disruptions.

"We’re living through a period of elevated risk,” former U.S. Treasury Secretary Lawrence Summers told "Wall Street Week” with David Westin on Bloomberg Television, for whom he is a paid contributor. "In the same way that people became anxious in August of 2007, I think this is a moment when there should be increased anxiety.”

At the heart of the strain: The fallout from the most aggressive hiking of interest rates since the 1980s. Having failed to foresee the surge in inflation to multi-decade highs, the Federal Reserve and most peers are now lifting rates at speed in a bid to restore price stability and their own credibility.

Evidence of the impact — and of the blow to consumers’ purchasing power from soaring prices — is mounting quickly. In the past several days, Nike reported a surging stockpile of unsold product, FedEx shocked with a warning on delivery volumes and key chipmaker South Korea saw the first drop in semiconductor output in four years as demand retreats. Apple is backing off plans to boost output of its new iPhones.

The turn is coming even before the full thrust of monetary tightening is felt. The Fed and many counterparts are pledging to keep going with steep rate hikes as they attempt to rebuild credibility. Quantitative tightening programs, where central banks remove liquidity by shrinking bond portfolios, are also just getting going.

Inflation data showcase the need for, as Fed Vice Chair Lael Brainard put it Friday, "avoiding pulling back prematurely” on tightening. She spoke shortly after the Fed’s preferred measure of prices jumped more than forecast. Earlier, data showed euro-zone inflation has punched into double-digits.

Layered on top of continuing reverberations from the Russian invasion of Ukraine, the spreading economic gloom is sowing fear in financial markets, creating its own worrying dynamic. A rapidly appreciating dollar, supercharged by the Fed, may help cool U.S. inflation, but it drives it up elsewhere by weakening other currencies — pressuring authorities to restrain their own economies.

"The global economy is in the eye of a new storm,” Reserve Bank of India Gov. Shaktikanta Das said Friday after lifting rates again.

Prospects for a second global recession so soon after the 2020 downturn triggered by the pandemic were hardly apparent a year ago. But Europe’s Russian-induced energy crisis, and China’s deepening property slump and continued "COVID zero" approach weren’t part of the consensus outlook.

Not all is dark, with U.S. job-market resilience a notable feature. But the plans by Facebook parent Meta Platforms for the first reduction in headcount ever illustrate how that may still change.

And Britain’s experience in recent days showcases how investors are in a mood to punish policymakers pursuing approaches deemed unsustainable. The Bank of England was forced to intervene in its bond market after the new U.K. government announced $45 billion of unfunded tax cuts.

"Forecasts of a soft landing for the global economy assume something close to perfect policy execution. The events of the last week demonstrate the reality can be very different,” Bloomberg chief economist Tom Orlik said. "The opportunity for further fumbles — after the U.K.’s fiscal fail and market meltdown — is high. And the cost, if they occur, higher.”

"Markets are concerned about fiscal policies becoming even looser despite inflation, or the dollar, getting excessively strong,” said Cui Li, head of macro research at CCB International Securities.

Nike’s troubles showed how the dollar’s appreciation is causing issues not just for developing nations that issued debt in the U.S. currency — Sri Lanka, Pakistan and Argentina are among those turning to the IMF for help — but also for American multinational companies.

The athletics-wear giant on Thursday downgraded its outlook, citing foreign-exchange effects and higher freight costs, which are a symptom of supply-chain delays and port congestion. That’s besides the need to embrace price markdowns given unsold stock. North American inventories climbed 65% in the three months through August.

Housing markets are also turning, walloped by surging mortgage rates. The U.S. in the past week saw the first decline in home prices in a decade.

"The question is how low growth will go, and for how long it will stay down,” said S&P Global Chief Economist Paul Gruenwald.

Perhaps the biggest X-factor is the potential for financial turmoil as the dollar, which has appreciated almost 14% this year as measured by the Bloomberg Dollar Spot Index, exerts pressure across markets.

Combine that with rapid increases in borrowing costs, and it spells the potential for trouble. Summers, the ex-Treasury chief, said "You can never be certain about what the consequences of that will be.”

That has echoes of the summer of 2007, when the impact of the collapsing U.S. housing market first began showing up in the financial system, with the closure of a number of funds and sudden liquidity shortfalls among banks. Things eventually morphed the following year into the worst financial crisis since the Great Depression.

Rising anxiety across global markets can be seen in the Bank of America Merrill Lynch GFSI Market Risk indicator, a measure of future price swings implied by options trading on equities, interest rates, currencies and commodities.

The gauge has jumped to the highest since March 2020, when markets were in full-blown pandemic panic.

Given the need to address inflation, diminished fiscal space in the wake of record spending on the pandemic, and varying priorities across major economies, the potential for joint action to address challenges may be in question.

"The incoherent macro policies within countries and absence of policy coordination across countries are both problematic,” said Cui Li at CCB.

It all makes for a potentially tension-filled gatherings of global finance chiefs this week for the annual International Monetary Fund and World Bank Oct. 10-16 in Washington.