In an interview with Bloomberg that aired Thursday on “Balance of Power,” White House Council of Economic Advisers Chairman Jared Bernstein said “strong demand” helped drive inflation, adding that the coronavirus Inflation rates were about the same in all G7 countries, although he conceded that the upward pressure on prices from virus stimulus was worth it. “And countries had different fiscal and monetary policies. So I think it would be a mistake to allocate too much of that increase to fiscal policy. And the Republican argument is fundamentally undermined by international comparisons. I think there is.”
“The president quickly recognized that supply chain disruptions, in part due to strong demand, were contributing to that inflation spike,” Bernstein said. And untying those chains will be very important. But what the president recognized was that he had to worry not just about inflation, but also about costs and price levels. So right after that peak, we started talking about what we were doing to reduce costs. ”
Co-host Kylie Reintz then said, “I understand your point about how supply-side factors ultimately contributed to upward price pressure. But there's also demand there. And it is true that excessive fiscal spending stimulates demand, which in turn leads to inflation. In retrospect, do you think the ultimate trade-off was worth it? We made the economy and labor market better off through some of that stimulus. What was the additional marginal upward pressure on prices in exchange for preserving the economy?
Bernstein replied: “I would put the next asterisk or caveat: If you look at the trajectory of inflation, or the cumulative amount that price levels have increased across all the G7 economies, it’s pretty much the same in every country, and they’re the same.” All had different fiscal and monetary policies. Therefore, I think it would be a mistake to allocate too much of that increase to fiscal policy. And I think the Republican argument is fundamentally undermined by international comparisons. That being said, another part of framing the question is very important. So what have we got? So we're handing over one of the strongest economies on record right now, and by some very important metrics, whether it's employment numbers or the current administration. Even if the average unemployment rate is 4% compared to [a] All these indicators, including historic performance and, of course, the strength of the stock market over the past few years, indicate that we must fight the pandemic recession as best we can. So what was going on in January 2021 when we got there and how our policies helped get this economy back to full employment and how it's been ever since. I want to be very careful not to lose my memory about what's going on. ”
to follow Ian Hanchett's Twitter @Ian Hanchett
