Biden advisers warn U.S. to go big after next economic shock

What they're saying: The warning comes in the final Biden-era Economic Report of the President — issued by the Council of Economic Advisers — that was released on Friday.

• "There are risks to robust fiscal action—including rising prices—but a strong fiscal response can deliver durable growth, and the risk of underreacting to a large global shock is material," the economists wrote.

The big picture: The report acknowledges that many pandemic fears that might have inspired the 2021 American Rescue Plan did not bear out.

• "With full information about the future, policymakers may have allocated fiscal support differently," they noted.

The intrigue: "The emergence of inflation does not negate the wisdom of a strong fiscal response," the economists noted. The 2020s inflation shock was global, suggesting U.S. fiscal support was not totally responsible for higher prices, they said.

• "Inflation harms businesses and families across the income distribution, but the prospect of future inflation must be balanced against labor market pain amid a large, negative shock."
• The Fed is "well-positioned to respond to demand-driven inflation when it arises," they added.

The bottom line: Inflation stuck around far longer than most policymakers anticipated and weighed heavily on consumers.

• Still, America had the strongest economic recovery of all rich nations — a lesson that Biden economists want lawmakers to remember.