Inflation makes economic forecast ‘as gloomy as it has been since administration began’ | American Institute of Enterprise

The Democrats’ longtime favorite economist, Mark Zandi of Moody’s Analytics, released several reports last year that policymakers have used to bolster calls for repeated rounds of trillion-dollar legislation. Those reports touted President Joe Biden’s “good economic policy” and downplayed inflation fears stemming from that costly legislation as “overblown.”

What a difference a year makes.

U.S. President Joe Biden meets with his Competition Council and discusses inflation and lower prices for families in the East Room of the White House, in Washington, U.S., January 24, 2022. REUTERS/ Leah Millis

This week, Zandi pointed to soaring inflation, saying “the economic backdrop is as bleak as it has been since the administration began.” He continued, “It’s just a very, very dark and deep issue. . . . There is nothing more pernicious for the collective psyche than having to pay more. And it will only get worse.

The table below shows key quotes from Zandi’s 2021 reports, which praised the administration’s economic policy while downplaying inflation concerns – if they mentioned inflation:

In retrospect, Zandi’s July and November reports downplaying inflation risk are all the more remarkable as they assumed the enactment of trillions of dollars of spending that does not occur– that is, the failure of the administration’s Build Back Better program.

These reports quickly became political fodder on Capitol Hill. Senate Majority Leader Chuck Schumer (D-NY) pointed to Zandi’s July report projecting “easing inflationary pressures” among the “benefits” that “one of the nation’s leading economists predicts that our two infrastructure bills will achieve”. Republican critics like Lindsey Graham (R-SC), a member of the senator’s budget committee, pushed back, suggesting, “If Democrats pass a $3.5 trillion spending package on top of everything else, “it take an inflation problem that we have today and pour jet fuel into it.” ‘.”

Zandi’s latest quotes on the economy’s troubles must be a very bitter pill for the Biden administration, which “blew Moody’s findings” from the July report to its press list. Indeed, in 2021, Zandi has arguably assumed the role previously played by the administration’s in-house economists in projecting the jobs effects of their $1.9 trillion stimulus bill. In a February 2021 speech, President Biden twice highlighted an “independent analysis” of “Moody’s, on Wall Street” when touting expected job gains from the US bailout enacted in March 2021. An article by February 2021 White House blog on the “Economics of the American Rescue Plan” did the same, citing data from Moody’s Analytics to argue for an economic strategy “centered on the belief that the costs of inaction far outweigh the costs of acting too aggressively”.

The Biden administration passed its massive stimulus package, so we’ll never know for sure what the “costs of inaction” might have been. But with even Zandi now admitting that inflation is a “very, very dark and deep issue”, the “costs of acting too aggressively” have become all too apparent.