For months, heavy inflation has been the topic on everyone’s lips as food and gas prices have soared, leaving many wondering what the leaders are doing. However, President Joe Biden and several experts have repeatedly reassured people that, despite inflation, there is no possibility of a recession.
The topic came back to the fore when Jared Bernstein, a White House Council of Economic Advisers member, admitted on Sunday that inflation was “unacceptably high.”
What Bernstein said
On Sunday, Jared Bernstein appeared on Fox News Sunday, where he discussed the state of the economy.
While acknowledging the high inflation, Bernstein also pointed out that President Biden does not believe the country will fall into a recession. Fox News Sunday anchor Shannon Bream noted that Biden had said that in 2021, no serious economist believed the country would enter a period of runaway inflation.
Today, US inflation was 5.4% at the time of his comment against the inflation rate of 9.1% this year.
Bream asked how the White House misinterpreted the situation, to which Bernstein replied:
“Well, that actually was the dominant forecast at the time, and we were very much doing forecasts across the board, including those at the Federal Reserve.”
He added that unforeseen events had triggered increased inflation, citing the war in Ukraine.
“Ukraine and Russia are both breadbaskets and energy baskets for the world,” he explained. “Those have put considerable upward pressure on prices. For example, for inflation, which is unacceptably high – let’s get that clear right out of the gate. Went up 1.3% in June – again, an unacceptable high increase.”
“Half of that is the increase in energy prices alone,” Bernstein added. “Still too high. But that’s moving in the right direction, giving Americans some much-needed breathing room. They need more, and we’re working on it, but that is a move in the right direction.”
Read also: Heavy Recession One of the Solutions to Combat Inflation, According to Analysts
The people’s sentiment
A poll on Sunday showed that 93% of American voters are worried about the level of inflation, and more than half fear it will only get worse within a year.
According to a Fox News poll, there is a 6% increase over May as 67% expressed extreme concern, while 25% are concerned that inflation hit 9.1% in June.
52% of voters who answered the survey predict that the situation could worsen by 2023, with the two halves split between “little” and “much” worse. Meanwhile, only 42% are optimistic about an improvement in the economy.
Read also: Six Quick Ways to Save Money on Insurance During Inflation
Administrative spending package
Bernstein also said the Democrats have agreed to reduce the cost of prescription drugs and health insurance premiums under the Affordable Care Act.
Bream added that Senator Joe Manchin’s opposition to some of the government’s big spending packages may have benefited the White House in terms of inflation.
“[What] Democrats are actually aligned on is a plan to lower prescription drug costs,” explained Bernstein. “And I think everyone who hears me say that probably gave some kind of an applause – everyone wants to see that happen.”
“But while Presidents have tried to make it happen for decades, it still hasn’t occurred. Now we pay two to three times for prescription drugs, what Europeans pay for precisely the same drugs. So it’s time to stand up to Big Pharma, come together. Do something on the affordability there.”
Biden’s climate change advocacy
Despite Manchin and others’ views on spending, particularly White House climate initiatives, Bernstein said Biden recognizes the priority of taking action on climate change and building clean energy industries – a necessity for the continued development of good American jobs.
“If there is no legislative path forward, he will take the executive order and rule change path,” Bernstein described Biden’s approach.
The state of the economy
Jared Bernstein also pointed out that the budget deficit is set to decline by 77% to $1.7 trillion in 2022.
GDP showed negative numbers in the year’s first quarter, while other numbers suggest it could see similar numbers in the second quarter. Meanwhile, the White House remains steadfast that the United States is not in a recession.
“It has to do with a number of economic variables that are actually doing better now,” Bernstein explained.
“It is very hard to conclude that we are in a recession when you look at the payroll and the job gains that we’ve seen now, it is tricky to look around the corner here, and I’m not going to predict quarters down the road.”
“But I think right now, you’ve got inflation headwinds big time in this economy – not taking anything from that – but you also have some very strong tailwinds that are boosting consumers.”
References:
93% of Americans ‘concerned’ with inflation, most fear economy will get worse: poll
