FX.co ★ Biden's spending plan could push inflation higher

Biden's spending plan could push inflation higher. This was said by economists during the virtual seminar hosted by the National Association for Business Economics on Wednesday.

American Action Forum President Douglas Holtz-Eakin, Moody's Analytics chief economist Mark Zandi and Harvard University professor Doug Elmendorf agreed that the president's economic plan will soon exacerbate inflationary pressures, but remained divided over how concerning that is.

Their comments came after Democrats debated the benefits of injecting more than $ 1 trillion into the economy amid the release of 6.2% October CPI data. Some lawmakers have expressed their concern about the impact of the bill on US inflation. Republicans echoed this concern and called the bill an "inflation accelerator".

But the White House continues to claim that the "Build Back Better" plan will counter the recent inflationary surge and reduce everyday expenses for most Americans.

Even so, Holtz-Eakin said he believes the recent surge in inflation can be attributed to the huge spike in government spending, which hit around $ 6 trillion during the pandemic. In just three months, from December to March 2021, Congress approved an additional $ 2.8 trillion in stimulus.

Elmendorf, a former Clinton administration economist and former director of the CBO, took a more average position in the long-term impact of the bill. He said that in his opinion, the plan will increase net demand, GDP, employment and inflation. He also named several reasons for the surge in inflation: excessive stimulus, supply chain disruption, and other problems.

But Elmendorf warned that the bill could go the wrong way, and if so, he hopes that it will not last long.