CBO’s projection of inflation into 2023 is too optimistic, “They are the last holdout on Team Transitory”
In an interview aired on Friday’s issue of Bloomberg’s ‘Wall Street Week’, Harvard professor, economist, director of the National Economic Council under President Barack Obama, and finance minister under President Bill Clinton Larry Summers reacted to the Congressional Budget Office’s projections that inflation will be 4.7% in 2022 and 2.7% in 2023 before falling to 2.3% in 2024 while unemployment remains below 4% is overly optimistic and the agency is «the last holdout of temporary teams» and the estimate is « their least plausible in the 40 years I’ve been watching. “
Summers stated: “I have always thought of the CBO as a bastion of credibility. I have seen CBO projections for 40 years. This is their least plausible in the 40 years I have watched. To be fair they have to lock that forecast for months ago, and a lot has happened that has been unfavorable in recent months, but they are the last stop on temporary teams, in the belief that we can somehow get the economy overstimulated and still cause inflation to go far down. “For the supply side, it̵[ads1]7;s just going to materialize wonderfully. It’s a conceivable outcome. It’s a possible outcome. How they could consider it as the most likely outcome is not something I can understand.”
He continued, “[W]Regardless of whether you have a forecast, imagine that it is on the upside, and imagine that it is on the downside, and see if the two things are equally plausible. And I, first of all, do not think that 4% inflation is – I think it is much, much more plausible than 0% inflation in two years’ time, and that tells me that 2% inflation is not really a best guess. “
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