Q&A – How Far Off Were Economists on Inflation in Biden’s First Year vs. 2025?

Just for drill I ran a probability for the same economists to miss as they did in 2021, at the level that they did, and in 2025 at the level and direction that they have and what came back was that the odds are effectively zero.

Episode Transcript

Speaker 1 (00:04):
You have questions, Brian has answers. It's time for today's
Q and A of today. This is the Brian mud Show.
Today's QNA, how far off.

Speaker 2 (00:14):
We're economists on inflation and Biden's first year versus this year.
This is brought to you by I Melissa as just
check mark collections. Each day I feature a listener question
that is sent by one of these methods. You may
email me Brian Mudd at iHeartMedia dot com, hit me
up on social at Brian Mud Radio. You may also
use the iHeartRadio talk back feature. We'd love it. If

(00:35):
you would love us, go into the app make us
you have one preset the Brian mud Show podcast number
two preset, And while you're in there, look for a
little microphone button.

Speaker 1 (00:44):
See it, tap it.

Speaker 2 (00:45):
You may lay down the message right there, maybe for
a future Q and A. And today's note is this, Hey, Brian,
I almost never miss a show. Appreciate that made a
really good point about economists underestimating inflation during President Biden's
first year while overestimating inflation throughout this year. Please break
this out for us so we can share it. Thank you,

(01:07):
you got it. You got it, And before we dive
into this for all the people, where are like, Oh.

Speaker 1 (01:12):
Trump's replacing people who know economics.

Speaker 2 (01:16):
Here's the latest from Fox This Jared Halpern. The President
is nominating Heritage Foundation economist EJ. And Tony to leave
the Bureau of Labor Statistics, the federal agency responsible for
producing monthly jobs reports. President Trump fired the previous BLS commissioner,
accusing her of manufacturing unemployment figures. Okay, so I mean,

(01:38):
how dare you These people are so good at their job, right, Oh, it's.

Speaker 1 (01:43):
So terrible, all these good economic people you know who
that is a angel? That is the how many masks
the hermit with.

Speaker 2 (01:52):
They might be down in two now two maybe two
mask hermit?

Speaker 1 (01:57):
Yeah, he's he's starting to get back to and it
is a he. Yes, he's getting back to the new
normal at this point. Yeah.

Speaker 2 (02:08):
So today's question dovetails with an observation I made in
yesterday's takeaways, specifically that economists consistently and woefully underestimated inflation
during President Biden's administration, while consistently overestimating inflation in Trump's
current administration. So let's side into the data to unpack this.

(02:28):
In twenty twenty one, as you will likely to recall
economists missed the mark by just a little bit. I mean,
this is your financial equivalent of just a bed outside. Actually,
it's probably even worse than that pitch was probably worse
than that.

Speaker 1 (02:49):
Better. Reserve Chairman Jerome pal was so.

Speaker 2 (02:52):
Flippant about the prospect of higher inflation under the Biden
administration's Year one policy that he infamous and repeatedly called it.

Speaker 1 (03:03):
What did he call it, Joel, I believe it was transitory.

Speaker 2 (03:08):
Yes, he the elitist, a hole that he is, wouldn't
even use the language of common folk like you.

Speaker 1 (03:15):
He wouldn't even dare say temporary because it's.

Speaker 3 (03:18):
So I'm an elitist economist and you peasant folks, you
are not even worthy of me using a commoner's word
like temporary. I use transitory because I looked down my
nose at you people spending billions of dollars on the
new FED building. He's that guy, so smuggy, just like

(03:42):
it's like, I'm not a violent person, but he's the person.
He's want to kind of like back end a little
bit because he's such a tool.

Speaker 2 (03:49):
But anyway, he only dropped the characterization of transitory when
inflation had already surged to a forty year high in
December of twenty twenty one.

Speaker 1 (04:00):
Only then did he drop that.

Speaker 2 (04:04):
During the first year of the Biden administration, the FED
projected headline inflation the consumer price index, What do you
think it was for the year? What do you think
they're people that know the Fed missed the mark still
don't know this part of it to this day.

Speaker 1 (04:21):
You know what they projected inflation to be by the
end of the year.

Speaker 2 (04:25):
Two point two percent to point two That was the
absolute peak of the inflation cycle they thought would happen
under Biden.

Speaker 1 (04:34):
Two point two.

Speaker 2 (04:37):
By the end of twenty twenty one, it was a
blistering seven percent. They underestimated within the same year inflation
by four point eight percentage points, or a miss of
three hundred and eighteen percent. But wait, there's more, because
again that two point two represented what they thought the

(04:57):
peak of it would be and at nine percent, meaning
the FED miss with their projected inflation peak would be
by a total of six point eight percent. But how
dare Trump want to get rid of these people? Right?
The FED was so bad at its projections and characterizations

(05:19):
that the Chief Economic Advisor to audience called the transitory
terminology by the FED the worst inflation call in the
history of the Federal Reserve. So the miss was said
to have stemmed from economist consensus that what inflation would
just be temporary driven by factors like chain bottlenecks from
the pandemic and some very short lived stimulus driven demand

(05:43):
from the so called American Rescue Plan that was anything.
But what they didn't account for was all of the
failed policies of the Biden administration. You open the borders,
you put out all that fake money, all that money printing,
watering down the value of the dollar. You have energy
that is not that is highly regulated. What are you

(06:07):
going to get? You're going to get rampant inflation. So
we saw that inflation surge to levels not seen since
Captain Peanut was still on the scene. See you contrast
that with twenty twenty five through July, where the script flipped.
Rather than historically underestimating the impact of inflation, now the
Federal Reserves, still led by Jerome Powell and the same
leading economists, have managed to be consistently wrong yet again,

(06:30):
only this time going the other way. Five out of
the first six full months of President Tromp's second administration,
the FED has overestimated the rate of inflation. The one
time they were right five out six, they've overestimated it
for accumulative miss, overestimating by over a half of one percent.

(06:51):
Now these overestimates are said to reflect the you know,
the the anticipated tariff increases and how that that would
end up being such a problem. There's no way we're
going to be able to get down to the two
percent target rate for inflation with Trump's tariffs. Perhaps most notably,
the inflation rate has fallen, not risen, but fallen from

(07:14):
three percent to two point seven percent under Trump, and
the consumer price index, the annualized inflation rate of only
Trump's first six months is one point nine percent, the
lowest inflation rates since Trump was previously president, a full
point lower than where the FED projected it would be
at this point. And the reason this matter is, of course,

(07:35):
is interest rate policy. Just as the Fed did not
raise interest rates quickly during the onset of Biden inflation,
the FED refuses to budge cut rates even though under
Trump inflation is below their target rate. So yes, by
the way, when you go ahead and you take a

(07:56):
look at this, I ran statistical analysis on the possibility
of this being completely explainable. How the same economists could
miss by as much as they did back in twenty
twenty one and miss by as much going the other
way as they have Here the odds came back at

(08:17):
effectively zero, effectively zero

Speaker 1 (08:21):
So do with that way you will, Yeah, something else,