In an interview with Bloomberg that aired Thursday on “Balance of Power,” White House Council of Economic Advisers Chairman Jared Bernstein acknowledged that the first Trump administration did not see a spike in inflation from tariffs. However, he claimed that the situation in 2025 will be significantly different from the situation in 2017.
Bernstein said: I know some of these people, they are good economists and they don't want to cause inflation or rise in interest rates, but they don't want to cause, for example, sweeping tariffs or deportations or unnecessarily high policies. Turning to the impact of fiscal stimulus, the end of tax cuts will also have a negative impact on the economy's fiscal outlook, all of which are inflationary, of course, and when you add in the loss of Fed independence. , you will have serious problems. I think they don't want to go there. ”
He continued: “I would say this: If we introduced tariffs in the first administration, some people think that they didn't hurt us on the inflation front.'' So 2025 will be very different than 2017, right?'' So you're looking at an economy that missed out on the downside in inflation for about five or 10 years. There you see an economy where interest rate yields were very low. Now, you're talking about an economy where inflation is on a flat path toward its goal, but yields are moving in the opposite direction if anything. There is a completely different environment in which to consider this kind of idea, and in that respect there is less freedom. And again, I think they know that. ”
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