Hedging your bets on a recession? Think again

One economist thinks we’ll all be just fine. 

Outside looking in 

When you have a legion of highly trained economists at your disposal, you’re spoiled for choice when it comes to forecasting the future. But when the most powerful man in the world takes a shine toward an economist who doesn’t even work for the administration, it’s bound to raise a few eyebrows.  

That’s exactly what has happened to Mark Zandi, chief economist at Moody’s. The Biden administration keeps citing Zandi’s reading of events as the one it thinks is most accurate – specifically, that the current surge in inflation is “largely the result of supply-side shocks to the economy”. Read: The Russian invasion of Ukraine and the pandemic.  

If Zandi is right, he thinks inflation will fall back to the Fed’s targeted 2% mark by the end of next year. No wonder Biden likes his reading of things.  

Better days ahead? 

The upshot? Zandi thinks that despite plenty of bumps in the road yet to come, the US will just about avoid a recession. He’s been keen to point out that despite slightly inflated markets, there’s no reason to believe there’s any lasting bubbles. So, is he right? Are things really better than feared? 

Forecasts are forecasts, and for all the thousands of economists offering their thoughts on the economic future of the US, there are a thousand different answers to choose from. But for all Zandi’s analysis of supply chain shocks, Covid lockdowns and speculative bubbles, there was little mention of the trillions of extra dollars pumped into the US economy. But that’s not a factor, we’re sure.