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of government. we are funded by these television companies and more includingcox. >> when connection is needed most, cox is there to help. bringing affordable intimate to families in need. and support. whenever and wherever it matters most pre-we will be there. >> supports c-span as a public service along with these other television providers venue a front row seat to democracy. we are joined to talk about the economic outlook with mike sandy , the chief economist from moody's analytics. mark zandi, welcome. so you said this earlier this fall that the economy right now is "among the best performing economies in my 35 years as an economist" explain that. guest: you can see by my

hairline i have been at this for a long time. i am hard-pressed to come up with a time when the economy has been performing better. look at the statistics. we are creating a lot of jobs across a lot of different industries and we have been doing that since the pandemic. unemployment is low just under 4% and it is low across every demographic group from age, ethnicity, educational, you pick it. and coast-to-coast everywhere in the country. inflation, and the rate of growth for prices it does for prices of goods and services but that has moderated. the stock market is at a record high and it seems like it is hitting one almost every day. if you are one of the two thirds of americans who own your own home you are enjoying record high housing values. the economy is a big elephant and i am talking about the

entirety of the elephant. depending on which part of the elephant you touch you get a different picture and i do think that higher income households are doing fabulously well and they are doing about as well as they ever have. middle income households are doing ok. not fantastic, great or bad but typical. folks in the bottom third are struggling with the previously high inflation and they do not have much savings or much in their cap -- much in their checking account. there are distinctions but broadly the economy is doing well. host: the economy is doing fabulously well i want to show you exit polls from the election and this is from cbs news. 67% of voters describe the state of economy as bad. 45% said their own financial situation is worse than four years ago. 30% say it was the same and 24% say it was better.

53% said that inflation was a moderate hardship and 22% said it was severe. how do you explain that especially that top line number with 67% saying the economy is bad. guest: there is a district -- a disconnect between the happy talk and these surveys. there is a bunch of stuff but i think it is top of the list of the things is the previously high inflation. if you go back to three years ago prices were rising for groceries, rent, gasoline and it was a direct result of the disruptions created by the pandemic and the russian war on ukraine. even though those prices are no longer rising, gas pricing is down and rents have not moved and grocery prices are flat, they are still up 20 to 25% on where they were two or three years ago. a lot of people in my work and asked the same question how are you doing financially and i am getting the same answer.

it turns out at least for my anecdotes that everyone has one food item that they buy on a regular basis that they use as a litmus test. robin -- ramen noodles or kombucha tea, baby formula or sugar. it is really the high inflation. the other thing i will call out quickly as i think that politics are fractured. people are very heated about their political perspective, and they are looking at the economy through the political prism. the university of michigan runs a survey every month, a how you are feeling. they release the most recent results and right after the election, the republicans responded to the survey went from being very pessimistic to the economy to being more optimistic and the democrats to the opposite. we are looking at the world through our political prism and that is influencing how we think about rings.

[coughing] host: sorry, my voice. i want to ask you about the causes of inflation regarding increased spending during the pandemic. guest: right. i'll let you get a glass of water and i will riff here a little bit. the thing you are referring to, the american rescue plan, that was the covid relief plan past early on in the biden administration and there has been a lot of conversation and debate about how important that has been to the inflation that ensued. i do think if you go back to 2021 and it was passed in march of 2021 and you go back to that summer and fall, inflation picked up because of the demand created by the benefits that were provided through the american rescue fund, the stimulus checks and unemployment

insurance. we were coming out of the pandemic and there was a lot of uncertainty. and that relief plan was designed to be big to help in case things turned out to be worse than they turned out to be. i have to say, the inflation at that time and it was hard to remember back, but that was deemed good inflation because we had been through a period and a decade of inflation below the federal reserve target and the fed was uncomfortable about how low the inflation was. they wanted inflation or higher to compensate and they got it. the real problem came a little bit later when russia invaded the ukraine at the start of 2022 when oil and natural gas prices moved and that is what inflation became a real problem. the american rescue plan and that spending tax bill that help the economy resulted -- did not result in inflation that at that

time it was deemed good inflation and desirable. host: what do you think of the handling of the interest rates. do you think that they lowered them too much. do you think they are easing up on the interest rates has been to slow. how would you rate that? guest: it is hard to be critical and think about the things they are responding to. the russian war and fiscal policy and a lot of stuff, it is hard to calibrate monetary policy to get that right. in hindsight, the fed was certainly too slow to begin normalizing out of the pandemic. they kept the federal funds rate at zero all the way into 2022. and that was in hindsight, a mistake. i was a bit fearful and they jacked up interest rates in 2022 and 2023 to cool things off. and they succeeded.

if i had this conversation before they started interest rates, i think they were maybe waiting too long and they are running the risk to push the economy into recession but i do not feel that way. they are cutting and normalizing rates and i think they are on track. host: i want to ask about tariffs because the president has announced -- the president-elect has announced that he would impose tariffs and bbc news says that china and mexico are warding about a trade war after trump vows to hike the tariffs. what is your reaction to that? this has been talked about allowed -- a lot about tariffs and their impact on the economy. guest: i am not a fan of broad-based tariffs. i understand targeted specific countries and specific products to make a point and to further

the trade negotiations and get everyone to play fair, so i get that. i do not get broad-based tariffs across the board. that is what president trump was talking about on the campaign trail and what he announced that he would do yesterday or the night before yesterday about the big tariffs on imports from mexico, canada and china. those are the three biggest sources of imports. the fundamental reason is that this raises the cost of living. we have to pay more for the stuff that is being imported. everything from food. we import a lot of groceries to furniture to cars to clothing. a lot of stuff, it is a tax increase and it is hard on lower and middle income households because they devote a larger share of their budget on those items. i am very skeptical that the tariffs and the threat of tariffs, and there is a lot of talk aboutt