Key Square Group founder Scott Bessent and America First Policy Institute chief economist Michael Faulkder discuss former President Trump's policies regarding Kudlow.
A prominent economist and educator warns that Americans, weighed down by the highest inflation rate in 40 years, are unlikely to see lower prices in the future.
Mohamed El-Erian, Allianz's chief economic adviser, said on Sunday that while inflation was falling, that meant price increases were slowing. That doesn't mean prices will eventually fall to pre-inflation levels in 2022, post-pandemic, he explained on CBS' “Face the Nation.”
“Well, we know the Federal Reserve is meeting later this week, and with inflation at or near their 2% target, they may raise interest rates again, but the average We see housing prices as high for people, we see food prices as high.'' What are the scenarios where those prices actually come down? asked presenter Margaret Brennan.
“Yes, that's what everyone expects, but it won't happen,” Elarian answered.
Why are consumers pessimistic about the economy even though inflation is falling?
Allianz Chief Economic Advisor Mohamed Ali El-Erian gestures during an event at the University of Cambridge, UK, November 25, 2021. (Holly Adams/via Bloomberg/Getty Images)
“The good news is that interest rates will continue to fall. The good news is that inflation, which is the rate at which the cost of living increases, will go down. But it's very difficult to bring prices down. One of the political problems is that “When you tell people that inflation is going down, what they think in their heads is that prices are going down, not the rate of inflation,” he explained.
“Unfortunately, that's a misconception, but you have to be careful what you wish for because if prices drop significantly, you're going to end up worse off financially.”
The Fed's preferred inflation measure showed that price increases continued to slow in September.
Inflation rose to a 40-year high of 9.1% annually in June 2022 due to pandemic-related supply chain disruptions and an influx of federal spending on relief programs and other initiatives. It has since fallen to 2.4% in September, and while the labor market remains strong as the Federal Reserve raises interest rates to slow the pace of inflation, prices remain lower than they were four years ago. About 20% higher.
Inflation and the economy remain top issues for voters who cast their votes for the next US president on Tuesday. Both Democratic nominee Vice President Harris and Republican former President Donald Trump have proposed economic plans that they say will ease inflationary pressures on households and boost economic growth.
Harris has called for new government spending, including investments in small businesses and tax credits for families raising children, while Trump has promised to cut regulations on energy production and raise tariffs to pay down the national debt. I am doing it.
US economy adds 12,000 jobs in October, far less than economists expected
People shop at a grocery store in Brooklyn, New York City, July 11, 2024. (Spencer Pratt/Getty Images)
El-Erian said the overall economic situation was good, even though prices remained higher than four years ago and October's employment report was much lower than expected.
“So most of the reports were distorted in very significant ways by the strikes and hurricanes, as you pointed out,” he said.
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“Margaret, the bottom line is that our economy is growing steadily. Inflation is falling, and the next government's main challenge will not only be to maintain so-called economic exceptionalism. But it's also critical that we continue to reposition ourselves towards the drivers of tomorrow's prosperity. ”
Fox Business' Eric Revell contributed to this report.
