Over The Hump Or Overstimulated? Annual Economic Forecast Conference Finds Near Term Outlook Strong But Long Run Risks Loom Large

RIVERSIDE, Calif., Nov. 11, 2021 /PRNewswire/ -- (www.ucr.edu) — From a demand standpoint, the U.S. economy has completely recovered from the pandemic recession. And output, although not there yet, will return to its long run trend in the near-term future. That according to a new forecast released yesterday at the 12^th annual Inland Empire Economic Forecast Conference, hosted by the UC Riverside School of Business.

The new outlook argues that while COVID-19 has been a human tragedy, it has never created the depression like economic conditions predicted by so many – and fear of those conditions led to a far too vigorous stimulus response.

According to the new forecast, the current economy has been set on fire by an overly aggressive government reaction to the pandemic, and it is that incitement that is driving today's ballooning inflation and supply chain disruptions. "What we saw was one of the most tremendous levels of economic stimulus ever dreamed of," said Christopher Thornberg, Director of the UC Riverside School of Business Center for Economic Forecasting and one of the forecast author. "Lots of public money created lots of private sector wealth – $29 trillion in household wealth in the United States to be exact – and that has overheated the economy."

The effects of that wealth are showing in the form of high savings rates, excessive consumption, rapidly rising asset markets, and exploding home prices. Indeed, for every dollar lost during the pandemic, the U.S. government gave back three and a half dollars, according to the analysis.

Although the forecast is predicting a continuation of robust economic conditions in the nation, California, and the Inland Empire over the next few years, in the longer term, the excessive Federal stimulus will introduce instabilities such as long-run monetary inflation, deepen the nation's long-run fiscal budget challenges, and possibly plant the seeds for the next downturn.

The 12th annual Inland Empire Economic Forecast Conference was held virtually on November 10^th. A copy of the forecast book can be downloaded in its entirety here.

Learn more at UCREconomicForecast.org.

Contact: Victoria Pike Bond, 415-488-7195, [email protected]

SOURCE UC Riverside School of Business Center for Economic Forecasting and Development

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