A recent research paper by four noted economists, including Larry Summers, the former Treasury Secretary under Barack Obama and former Harvard President, discovered that the real inflation rate during the Biden years, using pre-1983 calculations reached 18% in 2022.
The number is the highest inflation rate the country has seen in over 50 years.
This research project was published by these four authors at the nonpartisan National Bureau of Economic Research in late February and is just now making waves.
Marijn A. Bolhuis is an economist in the Macro Policy division of the International Monetary Fund’s Strategy, Policy, and Review (SPR) Department.
Judd Cramer is a Harvard Economist.
Karl Oskar Schulz a Harvard undergrad whose analysis found that the higher cost of borrowing is linked to persistent consumer gloom.
Larry Summers is a former Harvard President and Barack Obama’s Secretary of the Treasury. Larry worked as the chief economist of the World Bank from 1991 to 1993.
The researchers also found that if the pre-1983 calculations for the Consumer Price Index (CPI) or inflation rate has not come back down under 7 percent since its peak in 2022.
This study explains why American consumers are feeling squeezed under Joe Biden – inflation is eating up all their money.
Larry Summers tweeted out the study in February.
In new NBER paper with @MA_Bolhuis, @juddcramer and Oskar Shulz, we argue that the unprecedented increase in borrowing costs is crucial to explaining the low consumer sentiment of the last two years. 1/N
https://t.co/4CF4xVTlHv— Lawrence H. Summers (@LHSummers) February 27, 2024
Forbes reported:
Numerous commentators—especially those defending President Biden’s economic record—have puzzled over why Americans are sour about the state of the U.S. economy. Unemployment rates have returned to pre-pandemic lows, commentators correctly point out, and the official rate of inflation is declining. So why are Americans ignoring the view of many experts that the economy is doing well?
According to a striking new paper by a group of economists from Harvard and the International Monetary Fund, headlined by former Treasury Secretary Larry Summers, the answer is that Americans have figured out something that the experts have ignored: that rising interest rates are as much a part of inflation as the rising price of ordinary goods. “Concerns over borrowing costs, which have historically tracked the cost of money, are at their highest levels” since the early 1980s, they write. “Alternative measures of inflation that include borrowing costs” account for most of the gap between the experts’ rosy pictures and Americans’ skeptical assessment…
Joe Biden’s Record Inflation
What would inflation look like under the pre-1983 formula?
Bolhuis et al. then went on to see if they could recalculate the official CPI numbers using a pre-1983-like formula that incorporated the cost of mortgage interest, auto loan interest, and credit card interest on the cost of living. They found three things: first, that the pre-1983-like formula led to a dramatically different estimate of inflation in 2022 and 2023, peaking at 18 percent in November 2022.
Second, they found that consumer sentiment—as measured by the widely-used University of Michigan Index of Consumer Sentiment—correlated much more strongly with the pre-1983 CPI formula than it did with the modern one that excludes interest costs.
Third, they found these differences to be also true in Europe: higher interest rates were correlated with lower consumer sentiment, and vice versa.
Everyone knows it’s true.
President Biden is trying to gaslight us into believing that inflation is coming down. I understand the pain Americans are suffering from high prices. Since he took the oath of office three years ago…
Butter is up from $3.58 to $4.75
12 Eggs up from $2.36 to $3.54
Milk up from…— Robert F. Kennedy Jr (@RobertKennedyJr) April 8, 2024
Even Democrats know it’s true. They were just hiding how bad it really is.
Even Biden’s advisors agree: Inflation is out of control pic.twitter.com/PRgVE2apFE
— MAGA War Room (@MAGAIncWarRoom) April 11, 2024
