JAMES PIERESON: The Nobel Laureates Strike Out. In a letter released just in time for the presidential debate, a group of prize-winning economists speak up for President Biden’s economic policies—the same policies these same economists predicted would ease inflation and spur growth when they endorsed Biden’s Build Back Better agenda in 2021.

How did it all work out? The expert economists were badly mistaken on inflation. They said that Biden’s spending packages would “ease inflationary pressures,” but everyone understands today that those same policies stoked inflation. When they signed their 2021 letter, the consumer price index stood at 273; since then, it has surged by at least 15 percent, to its recent level of 313. This is called “being wrong.”

Interest rates have also surged since then, much to the detriment of prospective homebuyers and those planning large expenditures for autos, home appliances, and school and college tuitions. The interest rate on 30-year mortgages has more than doubled since the 2021 letter, from 2.8 percent to above 7 percent today. The prime lending rate, used by banks for most loans, swelled from 3.2 percent in 2021 to 8.5 percent today. The economists would do well to ponder their performance as forecasters.

We have no evidence to suggest that Biden’s spending packages promoted economic growth. Real GDP surged in 2021 to 5.8 percent, mostly a bounce-back from pandemic era lockdowns, but it has declined and levelled off since then, to 1.9 percent in 2022 and 2.5 percent in 2023. In a recent forecast, the Conference Board projects that growth in 2024 is likely to slow to less than 1 percent (year over year). Contrary to what our Nobel laurates would have us believe, it is more likely that Biden’s policies have caused inflation and rising interest rates that have retarded economic growth.

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