>> Neil: THE LAST TIME WE HAD
INFLATION NUMBERS LIKE THESE,
THE FEDERAL RESERVE WAS RAISING
INTEREST RATES ABOUT A FULL
PERCENTAGE POINT AT A TIME.
GROWING TALK THEY’LL HAVE TO UP
THE ANTE TO DO SO AGAIN.
JARED BERNSTEIN NOW WITH US FROM
THE WHITE HOUSE.
ARE YOU WORRIED ABOUT THAT?
THAT IT WILL REQUIRE THE FED TO
DRAMATICALLY RAISE RATES NOW?
>> THE FED IS ALREADY RAISING
RATES IN AN APPROPRIATELY
AGGRESSIVE MANNER.
WHEN PRESIDENT BIDEN RENOMINATED
CHAIR POWELL TO THE FED, HE HAS
SINCE BEEN REAPPOINTED AND MANY
OTHERS ON THAT SLATE ARE NOW
OVER THERE ON THE FED BOARD.
HE HAS FULL FAITH IN THAT PIVOT
THEY’RE ENGAGED IN.
BY THE WAY, THOSE OF US THAT
HAVE LOOKED AT MONETARY HISTORY
NOW THAT IT IS UNUSUAL FOR A
PRESIDENT TO BE SO SUPPORTIVE OF
A FED IN A RATE HIKING CYCLE
LIKE THIS ONE --
>> Neil: I DON’T KNOW ABOUT
THAT.
JIMMY CARTER HAD SUPPORT IN PAUL
VOLCKER.
HE HELPED THE ECONOMY AND GOT
INFLATION UNDER CONTROL AND ALSO
CONTRIBUTED TO JIMMY CARTER’S
DEFEAT.
>> IT’S A GREAT POINT.
YOU’RE CORRECT ABOUT THAT I WAS
THINKING ABOUT RICHARD NIXON AND
ARTHUR BURNS AND OTHERS
PRESSURING BACK THEN.
AND I THINK THE POINT IS THAT
THE PRESIDENT HAS CONSISTENTLY
LEANED IN TO THE FED AS THE
FIRST AND FOREMOST INFLATION
FIGHTER.
SO SIMPLE ANSWER TO YOUR
QUESTION, THEIR PIVOT IS
WELCOMED AND A SOLUTION TO THE
PRESIDENT.
>> Neil: AND THE FED MISSED IT
ON THE SEVERITY OF THE INFLATION
LIKE YOUR BOSS.
THEY CALLED IT TRANSITORY.
IT IS WHAT IT IS.
BUT WHAT CAN YOU DO NOW?
IS IT ALL UP TO THE FED?
>> LET’S TALK ABOUT WHAT WE CAN
DO AND WHAT WE ARE DOING.
NO, IT’S NOT ALL UP TO THE FED.
THEY OBVIOUSLY ARE IMPLEMENTING
THEIR INTEREST RATE TOOLS.
WE HAVE A LOT WE CAN DO AND ARE
DOING.
ONE THING THAT IS NOT IN TODAY’S
REPORT IS THE DECLINE IN PRICES
AT THE PUMP.
THEY’RE DOWN 40 CENTS OFF OF
THEIR PEAK FROM MID JUNE TO
TODAY.
YOU DON’T SEE THAT IN THE JUNE
REPORT.
THAT IS AN 8% DECLINE IN GAS
PRICES.
THAT WILL SHOW UP IN THE JULY
REPORT.
THAT DIRECTLY RELATES TO SOME OF
THE SUPPLY MEASURES THAT THIS
PRESIDENT HAS AUTHORIZED,
PARTICULARLY THE RELEASE OF 240
MILLION BARRELS OF OIL
RELEASED --
>> Neil: THAT’S VERY TRUE, JARED
BUT TAKING OUT FOOD AND ENERGY
PRICES AND LOOKING AT THE SCORE
INFLATION RECORD, IT WILL STILL
AT 5.9% CLIP, WHICH IS ALSO IN
AND OUT OF A 40-YEAR HIGH.
WITH OR WITHOUT GAS IN THE
PICTURE, I MEAN, ARE YOU
CLINGING TO SOMETHING THAT COULD
BE SHORT LIVED ANYWAY AND THE
INFLATION PROBLEM IS NOW
BROAD-BASED --
>> LET ME GO TO THE CORE.
I AGREE WITH YOU.
IT’S TOO HIGHLY ELEVATED AS
WELL.
I WANT TO BE CLEAR ON THE
STRATEGIC RESERVE, WE TALKED
ABOUT THAT WEEKS IF NOT MONTHS
AGO.
THAT IS ACTIVELY IN PLAY RIGHT
NOW.
THAT IS EVERY DAY A MILLION
BARRELS ARE COMING IN TO THE
MARKET.
IT’S 100 MILLION BARRELS A DAY
IN A GLOBAL MARKET BUT 1% ON THE
MARGIN IN A TIGHTLY SUPPLIED
COMMODITY MAKES A DIFFERENCE.
THE CORE.
HERE’S WHERE WE NEED CONGRESS TO
WORK WITH US.
THE KINDS OF BUDGETARY PRESSURES
THAT HOUSEHOLDS FACE IN THE
CORE, PRESCRIPTION DRUGS,
UTILITY BILLS, HEALTH INSURANCE
PREMIUMS.
VEHICLES.
CONGRESS COULD ACT TOMORROW ON
THE CHIPS BILL.
SOMETHING THAT THE SENATE
SUPPORTED IN A BIPARTISAN
MANNER.
THEY ALL --
>> Neil: ARE YOU SAYING MORE
SPENDING IS THE ANSWER?
>> I’M SAYING MORE INVESTMENT IS
THE ANSWER.
MORE INVESTMENT --
>> Neil: INVESTMENT IS SPENDING,
RIGHT.
AND PAST SPENDING EFFORTS HAVE
MADE THIS WORSE.
>> YOU RAISE AN IMPORTANT
DISTINCTION AND I APPRECIATE
YOUR DOING SO.
THERE’S A BIG DIFFERENCE BETWEEN
SENDING CHECKS TO HOUSEHOLDS,
WHETHER THEY’RE THE EMERGENCY
CHECKS FROM THE RESCUE PLAN OR
UNEMPLOYMENT CHECKS, WHICH YOU
DON’T NEED AS MUCH OF WHEN YOU
HAVE 3.6% UNEMPLOYMENT AND
INVESTING IN SHIP PRODUCTION,
INVESTING IN CHILD AND ELDER
CARE, INVESTING IN OUR NATION’S
INFRASTRUCTURE.
ALL OF THOSE IMPROVE THE
ECONOMY’S SUPPLY SIDE AND THAT’S
A PLUS FOR TAKING DOWN
INFLATION.
>> Neil: YOU KNOW, LEAVE IT TO
ACADEMIC HISTORY TO SHOW IT
DOESN’T PAN OUT THAT WAY.
HOPE SPRINGS ETERNAL.
LET’S GET BACK TO THE DECLINING
PRICES AND WHETHER TAPPING THE
RESERVE HAS BROUGHT THESE PRICES
DOWN.
MAYBE IT’S AS SIMPLE AS PEOPLE
THEMSELVES ARE TAPPED OUT.
MAYBE THE SLOW DOWN IS SHOWING
UP IN DEMAND.
PEOPLE ARE NOT GOING TO THE GAS
STATION AS MUCH.
NOT BUYING AS MUCH FOOD OR
EXPENSIVE FOOD.
IT IS SHOWING UP.
THE SOLUTION FOR THIS MIGHT BE A
RECESSION.
WHAT DO YOU SAY?
>> TWO POINTS.
FIRST OF ALL, IF YOU LOOK AT THE
AMOUNT OF ECONOMIC ACTIVITY IN
THIS ECONOMY, INCLUDING IN
TRANSPORTATION, WHETHER IT’S
PEOPLE FLYING OFF TO TAKE
VACATIONS TO THE EXTENT WHERE
THEY’VE HAD TO SHUT DOWN CERTAIN
PARTS OF EUROPEAN AIRPORTS
BECAUSE THERE’S SO MUCH AIR
TRAVEL OR THE AMOUNT OF MILES
THAT PEOPLE ARE DRIVING, WE
DON’T SEE VERY MUCH DEMAND
DESTRUCTION.
>> Neil: YOU DON’T SEE THIS
MAYBE POTENTIALLY AS A FINAL
HOORAH FOR PEOPLE THAT AFTER
THEY WERE LOCKED IN THEIR HOME
AND THEY’RE PAYING FOR THAT AND
AFTER THAT IT’S OVER AND WE
COULD HAVE SOMETHING WORSE?
WHAT DO YOU SAY?
>> HERE’S THE ARGUMENT YOU AND I
ARE HAVING RIGHT NOW.
>> Sandra: IS THE CAR SLOWING
DOWN OR IS THE CAR STOPPING?
I’M IN THE SLOW DOWN CAMP.
YOU’RE WORRIED ABOUT THE STOP
CAMP.
THE PRESIDENT HAS TALKED ABOUT
THE IMPORTANCE OF GROWTH
DECELERATING FROM THE BREAK-NECK
PACE OF 2021, THE V-SHAPED
RECOVERY THAT HELPED BRING US
THE MOST WELCOMING LABOR MARKET
I’VE SEEN IN MY LONG
PROFESSIONAL CAREER TO A MORE
STEADY AND STABLE GROWTH RATE.
SO AT THIS POINT, PEOPLE ARE
DEFINITELY BENEFITTING FROM THAT
40 CENT DECLINE AT THE PUMP,
STILL DRIVING A LOT.
GAS PRICES ALONG WITH ALL OF
THESE OTHER CATEGORIES ARE STILL
UNACCEPTABLY ELEVATED.
THAT’S WHY WE NEED MORE POLICY.
I’M NOT IMPLYING THAT THE
STRATEGIC RESERVE RELEASE IS THE
ONLY REASON WHY THE GAS PRICES
HAVE COME DOWN, BUT IT IS IN THE
MIX.
>> Martha: .
>> Neil: DO YOU GUYS EVER START
FEELING LIKE IT’S JIMMY CARTER
DEJA VU AND THAT THAT’S WHERE
WE’RE HEADED?
>> I THINK THE DIFFERENCE THERE
IS BETWEEN THE KIND OF
STAGFLATION THAT THEY WERE
FACING AND THE VERY DIFFERENT --
AND MORE NUANCED ECONOMY THAT
WE’RE FACING.
YOU LIKE TO FOCUS ON THE HEAD
WINDS.
I GET THAT --
>> Neil: I FOCUS ON REALITY.
I FOCUS -- I HAVE NO POLITICAL
AGENDA.
I LOOK AT THE DATA.
THE DATA DOESN’T LOOK
ENCOURAGING.
>> YOU’RE CHOOSING WHICH DATA TO
EXCLUSIVELY LOOK AT HERE.
>> Neil: I THINK I GAVE YOU 11
PIECES OF DATA.
>> LOOK, THE HEADLINE AND THE
CORE INFLATION ARE UNACCEPTABLY
HIGH.
THAT IS ABSOLUTELY A RELEVANT
DATA POINT FOR YOU TO BRING TO
THE TABLE AS YOU HAVE.
LET’S NOT FORGET ABOUT THE
BACKDROP OF THE STRONGEST LABOR
MARKED WE’VE SEEN.
A COUPLE DAYS AGO, WE WERE OUT
HERE TALKING ABOUT A JOB MARKET
THAT DELIVERED 372,000 JOBS IN
JUNE, MILLIONS SINCE THIS
PRESIDENT GOT HERE WITH
VACANCIES, WITH STRONG NOMINAL
WAGE --
>> Neil: SO THE LABOR MARKET IS
BACK BEFORE COVID HIT IN THE
PRIOR ADMINISTRATION.
IT’S BACK TO THAT, RIGHT?
>> I THINK -- YES, THE
UNEMPLOYMENT RATE IS ABOUT BACK
WHERE IT WAS.
THIS IS AN INCREDIBLY IMPORTANT
BACKDROP.
SO LET’S NOT JUST TALK ABOUT
HEAD WINDS.
LET’S TALK ABOUT TAIL WINDS,
TOO.