Banker’s Paradise? NEC’s Brainard Pushed to Change Biden Budget Forecast to Rosier View (For Lower Rates, More Optimistic Growth)

We are living in a banker’s paradise. Where a top administrative official pushes to change forecasts of the economy. Hey, it’s a Presidential election year and literally anything goes.

(Bloomberg) — Joe Biden’s top economic aide, Lael Brainard, successfully pressed to adjust a White House forecast in a way that resulted in a slightly rosier outlook in the president’s forthcoming budget plan, according to people familiar with the matter.

The disagreement was over forecasts for 10-year Treasury yields in the budget, a linchpin estimate that is intertwined with other measures, like debt service costs.

Forecasts in the president’s budget proposal — scheduled for release Monday — are typically set by Treasury Secretary Janet Yellen, Office of Management and Budget Director Shalanda Young and the chair of the Council of Economic Advisers, Jared Bernstein. The group is known in fiscal circles as the troika.

The “troika”? More like The Three Stooges.

An October meeting, however, included a fourth invited principal: Brainard, who directs the National Economic Council. Brainard at one point disagreed with Yellen, Young and Bernstein on the 10-year interest rate projections and predicted a slightly lower rate, the people said, speaking on condition of anonymity to detail the discussions.

The difference between the forecasts was modest and both were well within range of private-sector estimates, the people said. The exact scope of Brainard’s changes aren’t clear.

Brainard’s forecast painted a modestly better picture for Biden. A lower interest-rate forecast would have the effect of an improved overall outlook by offering more support for growth and suggesting less concern about inflation. It also would lower borrowing cost projections at a time of rising worries about the US deficit and debt.

Let’s see what the Troika have to say about the quits rate.