Democrats’ longtime favorite economist, Mark Zandi of Moody’s Analytics, issued multiple reports last year that policymakers used to bolster calls for repeated rounds of trillion-dollar legislation. Those reports touted President Joe Biden’s “good economic policy” and downplayed any inflation fears stemming from that costly legislation as “overdone.”
What a difference a year makes.
This week Zandi pointed to soaring inflation, stating that “the economic backdrop is as dark as it has been since the start of the administration.” He continued: “It’s just a very, very dark and deep problem. . . . There’s nothing more pernicious on the collective psyche than having to pay more. And it’s only set to get worse.”
The table below displays key quotes from Zandi’s
2021 reports, which lauded the administration’s economic policy while minimizing
inflation concerns—if they mentioned inflation at all:
|
Date |
Report Title |
Key Quote |
| January 2021 | The Biden Fiscal Rescue Package: Light on the Horizon |
“Biden’s expansive fiscal policy proposal is good economic policy. The economy is far from full employment, inflation remains well below the Federal Reserve’s 2% target . . .” |
| April 2021 | The Macroeconomic Consequences of the American Jobs Plan |
The report does not mention concerns about inflation resulting from what became the November 2021 infrastructure law. |
| May 2021 | The Macroeconomic Consequences of the American Families Plan and the Build Back Better Agenda |
The report does not mention concerns about inflation resulting from the Build Back Better agenda. Instead, it suggests “The most substantial pushback against the plan is the higher taxes on corporations and the well-to-do.” |
| July 2021 | Macroeconomic Consequences of the Infrastructure and Budget Reconciliation Plans |
The report suggests inflation concerns are “likely misplaced”: “Some worry that the proposed fiscal policy is too expansive given support already provided to the economy during the pandemic, and this will exacerbate the inflation pressures that are evident as the economy reopens from the pandemic. . . . This concern cannot be dismissed, but it is likely misplaced.” |
| November 2021 | Macroeconomic Consequences of the Infrastructure Investment and Jobs Act & Build Back Better Framework |
The report generally repeats the July statement and suggests that inflation concerns are “likely overdone”: “Some worry that the proposed fiscal policy is too expansive given support already provided to the economy during the pandemic, and this will exacerbate the inflationary pressures that are evident as the economy recovers from the pandemic. . . . This concern cannot be dismissed, but it is likely overdone.” |
In retrospect, Zandi’s July and November reports
minimizing the risk of inflation are even more noteworthy since they assumed
the enactment of trillions of dollars in spending that didn’t happen—that
is, the administration’s failed Build Back Better agenda.
These reports quickly became political fodder on Capitol Hill. Senate Majority Leader Chuck Schumer (D-NY) pointed to Zandi’s July report to project “easing inflation pressures” as among the “benefits” that “one of the nation’s leading economists predicts our two infrastructure bills will achieve.” Republican critics like Senator Budget Committee ranking member Lindsey Graham (R-SC) pushed back, suggesting “If Democrats enact a $3.5 trillion spending package on top of everything else, ‘it will take an inflation problem we have today and pour jet fuel on it’.”
Zandi’s latest quotes about the economy’s troubles must come as a very bitter pill for the Biden administration, which “blasted out Moody’s findings” from the July report to its press list. Indeed, in 2021 Zandi arguably took on the role previously held by administration in-house economists in projecting the employment effects of their $1.9 trillion stimulus law. In a speech in February 2021, President Biden twice pointed to “independent analysis” from “Moody’s, on Wall Street” in touting the expected job gains from the American Rescue Plan enacted in March 2021. A February 2021 White House blog post on the “Economics of the American Rescue Plan” did the same, citing data from Moody’s Analytics in arguing for an economic strategy that was “centered around the belief that the costs of inaction are far higher than the costs of acting too aggressively.”
The Biden administration passed its massive stimulus plan, so we’ll never know for sure what the “costs of inaction” might have been. But with even Zandi now admitting that inflation constitutes a “very, very dark and deep problem,” the “costs of acting too aggressively” have become all too apparent.
The post Inflation Makes Economic Forecast ‘As Dark as It Has Been since the Start of the Administration’ appeared first on American Enterprise Institute – AEI.