Top Economists Including Obama’s Treasury Secretary Discover Real Inflation Number Under Biden Reached 18%, Still Hovering at a 40-Year High

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A now-viral research paper by four renowned economists including Lawrence Summers, who served as the Secretary of the Treasury under the Obama administration, has revealed that the real inflation rate under Biden, using pre-1983 calculations, reached 18% in 2022.

Originally released in February, the National Bureau of Economic Research study is vindicating American consumers struggling under the Biden administration despite repeated MSM articles saying the economy is fine.

We show that if we make an effort to reconstruct the CPI of Okun’s era—which would have had inflation peak last year around 18%, we are able to explain 70% of the gap in consumer sentiment we saw last year. 8/N pic.twitter.com/ZuXcck68LK

— Lawrence H. Summers (@LHSummers) February 27, 2024

“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,” reports The Gateway Pundit. “This study explains why American consumers are feeling squeezed under Joe Biden – inflation is eating up all their money.”

Below is Summers’ thread on X about the issue:

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

Since Okun invented his misery index in the 1970s, economists have looked at unemployment and the inflation rate to gauge consumer sentiment. But now that unemployment is low and inflation has declined, consumer sentiment remains depressed. 3/N pic.twitter.com/1dMh4GvVxT

— Lawrence H. Summers (@LHSummers) February 27, 2024

In the paper, we show that the variation in the current University of Michigan Index of Consumer Sentiment, which cannot be explained by official inflation and unemployment, has historically shown a strong correlation with proxies for borrowing costs. 5/N pic.twitter.com/DnA0oMXlLx

— Lawrence H. Summers (@LHSummers) February 27, 2024

We then develop alternative CPI measures that explicitly incorporate the cost of money. The CPI does not only exclude mortgage costs, but also personal interest payments, which increased by more than 50 percent in 2023. 7/N pic.twitter.com/pa8qAlerqv

— Lawrence H. Summers (@LHSummers) February 27, 2024

We also show the sentiment gap in 2023 was not only a U.S. phenomenon as rates have jumped around the world. Overall, our paper highlights how consumers care about the cost of money, with potential for consumer sentiment to rise significantly if and when interest rates decline.…

— Lawrence H. Summers (@LHSummers) February 27, 2024

h/t: The Gateway Pundit

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