The man behind Bidenomics

“There are growing worries about inflation in the housing sector, shelter costs, because they make up such a large share of household budgets, but especially for people near the lower end of the income scale. Low-income families, a big chunk of their paycheck goes toward shelter or rent in particular. I think that the concern is that that could be the next area where we’re seeing bigger price increases. But I also think a lot of economists expect that the supply-chain issues won’t be resolved very quickly.” — Kate Davidson, POLITICO Morning Money author

On consumer spending trends, inflation and port issues:

“When the pandemic hit and there was this lockdown, two very important things happened. One was that people started spending less money on services. They were not going to restaurants, they weren’t traveling. They weren’t spending money on hotels. That meant that they could spend more money on goods. At the same time, some of the relief plans helped provide more resources to families to help get them through this period. Now all that spending on goods interacted with pandemic-induced supply-chain snarl-ups that meant getting goods through the ports from ship to shelf is going to be a challenge. That’s where we’re intervening. But strong demand plus constrained supply equals elevated prices. That’s why we have a supply-chain task force, of which I am a card-carrying member. What this task force does is, we’re looking at the most granular aspects of the supply chain and trying to unsnarl them so that these goods can flow through them speedier and get from ship to shelf more quickly. We’ve helped move the ports of Long Beach and Los Angeles, where 40 percent of our imports come through. We’ve helped them move them to a 24/7 schedule. We’ve helped to reduce dwell time. Dwell time is how long a container sits in a port. That’s down by about a third because of the work that we’re doing with the ports and, you know, this kind of public-private partnership.” — Jared Bernstein, White House Council of Economic Advisers Member

On inflation, transitory and otherwise:

“In the early months of our administration, when these kinds of arguments were starting to surface, we were actually very clear that we thought that the rescue plan would generate some economic heat. But we were also clear that we believe that heat [is] not equal to overheat. Yes, we emphasized that these measures get into the economy. They do a lot of very important work, and then they get out. So you can label it with whatever word you want. But I think the key fact is that clearly prices are highly elevated, and that’s a real concern of our administration. But every forecast you see has them considerably lower in the second half of next year. Now, we have to be absolutely prepared for those forecasts to be wrong. The kinds of actions I just described in the supply chains are very much where we want to be in that space. But that is the kind of temporal story of how we envision this. But here’s the part that gets lost: The elevated inflation cannot be looked at in isolation as the only thing that has come out of the work of our administration because that would be not just objectively and politically unfair, it would be a real mistake in terms of learning from our actions and their economic impact. The poverty rate in 2020 was lower than the poverty rate in 2019.” — Jared Bernstein, White House Council of Economic Advisers Member

“Extending jobless benefits, I think people thought that that made sense because there were still a lot of people out of work. But some folks said, ‘Do we really need to send another round of stimulus checks to people?’ I think they definitely didn’t anticipate that their policies would drive inflation up as much as it has. It’s not as though they looked at this and thought that this was a likely scenario and decided to go ahead anyway. They definitely did not anticipate that. When people would raise this question of inflation, the response was, ‘We know there’s going to be some inflation because prices really plummeted at the very beginning of the pandemic.’ One year later, when you compare it to prices a year earlier, it looks like they were much higher. But really part of it was prices coming back up to pre-pandemic levels. But their answer was, ‘Look, if we get inflation higher than we expect or than we’re comfortable with, the Fed has the tools to deal with that.’” Kate Davidson, POLITICO Morning Money author


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