Chapman Economist Forecasts Higher Inflation and Interest Rates By Lynette Bertrand, Director of Marketing & Communications, CACM
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sharp economic recovery, resulting from federal stimulus and deficit, often brings with it other long-lasting effects. That was the overall forecast offered by Chapman’s top economist Dr. James Doti. The U.S. economic recovery from COVID was a dramatic V shape. Overall GDP (gross domestic product) rose to 6.7 in 2021, a significant rise from a 3.5 percent drop in 2020, according to Doti, who presented Chapman University’s 2021 Economic Forecast to CACM members. Doti, who presented his findings during a webinar in late June, noted that the sharp and fast recovery was a result of what he called the most significant fiscal stimulus in the nation’s history -- an unprecedented $5 trillion has been spent to revive the economy through three federal spending packages. However, this move had secondary effects. It led to a dramatic increase in the nation’s money supply of more than 25 percent. Doti surmises that an increase in money supply always has led to inflation in the past. He pointed to different periods in U.S. history when money supply increased and was followed shortly after by inflation. “Every time money increases sharply, you have a sharp increase in inflation,” Doti said. “What do we expect now? That’s what econometrics is -- taking history, quantifying it and seeing if it repeats itself.” Money supply has increased from 7.9 to 25.6 percent over the past year. “It’s very similar to what happened at the end of World War II,” Doti said. Applying economic theory and history, he
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Vision Fall 2021 | cacm.org
