Chief Economist Jared Bernstein admits that inflation is not “temporary”.
White House Chief Economist Jared Bernstein admitted Monday that the Biden administration’s use of the word “temporary” to describe rising inflation gave Americans the wrong impression that price hikes would only be temporary.
Bernstein admitted that – amid concerns about a looming recession – when he claimed the economy was in excellent shape for a skeptical White House press corps.
The Council of Economic Advisers member claimed ordinary people misunderstood the term last year when it was proposed by the Biden administration to describe inflation, which continued to rise and hit a new 41-year record of 9 in June .1% reached.
And he went on to use inaccessible economic terms in a presentation at the start of the daily press secretary’s briefing to reassure reporters that a recession is unlikely — or at least tried to make it appear that way.
Ashley Parker of the Washington Post asked Bernstein, “What made the White House realize that the [term ‘transitory’] was inaccurate and also politically problematic?”
“I think it has to do with the — I’ll use an economic term, periodicity –” Bernstein said.
“That what?” Parker asked.
“See, that’s why you’re doing a better job than me,” he said in an apparent attempt at self-deprecating humor. “I think it has to do with the ambiguity about the length of that word, that has to do with it. I think it has to do with the ambiguity about the length of this word.
“Some people hear transitory and think about it for weeks and months. Others hear transitory, particularly likely economists who are used to the broader ebbs and flows of cycles and think of longer periods of time, and I think the lack of specificity about the cadence implied by that word, the temporal cadence implied by implying that word led to a degree of ambiguity not very conducive to debate.”
Parker added, “What’s in the second part right now, about politically problematic?”
“I think when it comes to political issues, you’ve heard the President say over the last few days that inflation is unacceptably high and that bringing it down is the absolute number one domestic priority,” he said.
Reuters reporter Jeff Mason had previously harried Bernstein with his rosy economic forecasts that the US economy is not headed for recession as interest rates rise to curb inflation.
“I am sure we all remember that a year ago other colleagues of yours were standing here saying that inflation is ‘temporary’ and would not last and that it certainly would not lead to where we are now are,” Mason said. “Do you think it’s possible that in a few months you’ll regret standing here and saying we’re not going into a recession?”
“Well, I want to be very clear about what I’m saying,” Bernstein evaded.
“What I’m saying is based on consumer spending, based on payroll, based on the unemployment rate. I think we can confidently say that these numbers that we are releasing are very inconsistent with a recession statement that we just got there. I think that’s the most accurate way to judge the answer to that question,” he said.
“When it comes to interim forecasts, I think the answer is that we’ve been careful to consistently reference the forecasts that are out there, not just pretty much any forecaster’s view of inflation trajectories that we can find could, but of course also the Federal Reserve,” said Bernstein first of all about the term.
“And so this was a time when we had not seen a new variant of the virus, when of course the war in Ukraine was not yet a reality. So I think if you look at the general trajectory of where the projections were pointing in there, that was generally how we were trying to talk about it. And I think that’s worth going back and checking out.”
The briefing has been controversial at several points.
At one point, Newsmax reporter James Rosen snapped at Bernstein, “If you don’t have both, if gas prices go up, that has nothing to do with the President. If we see a drop, do you want him to get the credit?”
“The President has been responsive from the start and talked about this being such an important priority to ease that pressure on behalf of the American people,” Bernstein said.
Officials in the Biden administration — including the president — have taken the heat for inaccurately describing inflation as fleeting.
Then-White House press secretary Jen Psaki claimed at an August 2021 briefing, “We rely on the Federal Reserve for forecasts — that they expect to return to normal levels next year, and they still will.” forecast as a temporary impact on prices. ”
Biden claimed in December that November’s 6.8 percent annual inflation rate was likely the “peak.” He said in July 2021 that high inflation is “temporary” if it’s around 5 percent.
Biden called NBC journalist Lester Holt a “smart guy” in early February — before Russia invaded Ukraine — when the TV host pointed out that Biden incorrectly said high inflation was temporary and instead had risen higher.
“I think it was July, you said inflation would be temporary. I think a lot of Americans are wondering what you mean by temporary,” Holt said.
“Well, you’re a bit of a wise guy with me,” Biden said. “And I understand that’s your job.”
Biden told Holt that shortages in the COVID-19 supply chain had helped fuel inflation and singled out a shortage of semiconductors for cars — even though the federal CPI tracked big jumps in a broad basket of goods and services.
“When can Americans expect some relief from this rising inflation?” asked Holt.
The President said: “According to Nobel Laureates, 14 of them who have contacted me and a number of company leaders, it should be able to taper off later this year.”
While Biden generally denies blaming inflation, in a November case he acknowledged that his $1.9 trillion American Rescue Plan Act, passed without Republican support, likely had some impact on rising prices — a point his Republican critics often make.
“The irony is that people have more money now because I passed the first big law. They all got checks for $1,400. They got checks for a whole bunch of things,” Biden said, adding, “It’s changing people’s lives. But what happens when there’s nothing to buy and you have more money to compete to get it? [goods]? That creates a real problem.”
A study released in late March by researchers at the Federal Reserve Bank of San Francisco says about 3 percentage points of U.S. inflation — or about half of it at the time — in the last quarter of 2021 may have been caused by government pandemic spending.