White House National Economic Council Director Lael Brainard said on CNBC’s “Squawk on the Street” on Friday that consumer spending in August showed inflation rose 0.4% on a monthly basis and 3.5% on an annual basis. Expenditures (PCE) reacted to the price index. Core PCE is up 0.1% on a monthly basis and 3.9% on a yearly basis, which he said is “absolutely good news.” He also said the economy was doing “very well” in response to a question about interest rates remaining high and other factors that could keep inflation high. But at the same time, he said, “House Republicans should recognize the tremendous sacrifices the American people have made.”
asked co-host Sarah Eisen. I think it’s good news that core PCE is below the 4% level and is actually starting to decline, which is certainly what the market is taking. Do you think we are on a sustainable path to significantly lowering inflation?”
Mr. Brainerd replied: “Well, you’re right. I think today’s inflation numbers are absolutely good news. It’s what we were expecting. If you look specifically at core inflation, it’s running at 2.2% on a three-month annualized basis. That’s really, really encouraging. Unemployment has been below 4% for 19 months in a row, with inflation falling and especially with core inflation at pre-pandemic levels.”
Then Aizen asked: We still expect core inflation to be 3.9%. Inflation in services is a particular problem. And then there is the force of rising gasoline prices. I know it’s not the core part, but it can percolate and it’s certainly important. Strikes, the UAW, potentially health care workers, all of that – isn’t that a threat of continued rise in inflation? ”
Brainard said, “So I have to say that the main story of all the naysayers was that we can’t bring down core inflation without a huge increase in job destruction. We are seeing continued job creation, and core inflation has fallen to the same range as before the pandemic, at 2.2% in three months, which is in line with people’s situation before the pandemic. Yes, I think there are risks to the economy. But the economy has proven to be incredibly resilient, and the real problem now is not taking that resilience for granted. I think it’s about not thinking about it. And especially when you look at what’s going on with the House Republicans on the Hill, when the economy is doing so well, unenforceable mistakes like completely unnecessary shutdowns. I think they’re just really worried about putting the economy at risk unnecessarily.”
Mr. Eisen then asked: “As far as the economy is concerned, Secretary Brainard, I think the fact that this shutdown is happening at a time where there are a lot of potential shocks. Interest rates continue to rise in the market. And obviously it’s a headwind for the economy as a whole. At the same time, student loan payments are restarting. Gasoline prices are going up, oil prices are continuing to rise. This is all taking a hit. Starting in the last quarter of this year. What are your expectations for growth over 2024?”
Mr. Brainerd replied: Many of these risks come at a time when I think House Republicans should recognize the great sacrifices Americans have made. They are contributing to a very strong economic recovery. The economy has been very resilient. The last thing we need is all that progress, all that hard work, so many Americans coming off the sidelines and into the workplace, so why put it all through unnecessary shutdowns? Should we risk it? ”
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