On Thursday’s broadcast of CNN’s “New Day,” White House Council of Economic Advisers member Jared Bernstein argued that inflation numbers in Europe, which are “not quite as high as ours,” undercut the argument that “somehow U.S. spending was responsible” for inflation.
Co-host Brianna Keilar asked, “We’re looking at some of the numbers here of the increase in costs for certain items, items that people cannot avoid purchasing. Was Joe Manchin right about the impact of spending under this administration on inflation?”
Bernstein responded, “Well, I think if you’re trying to understand inflation and our spending or our fiscal policy, you have to consider a couple of things. First of all, let’s look at Europe, they didn’t do the same fiscal or monetary policies that we did, and their inflation is also historically elevated. And I think the last reading over there was 7.5%, year-over-year. That’s not quite as high as ours, but it’s a historic high for them as well. So, we’re seeing inflationary pressures across the globe. Putin’s price hike is very much in the mix now, with its pressure on commodity prices, particularly food and energy. But here’s the thing, you also have to ask yourself, what did we get for this economic heat, for the spending in the Rescue Plan? Well, evictions hardly increased at all. Typically, when we’ve had unemployment go up as high as it did, it was almost 15%, we saw more evictions, we saw households in much worse shape, we saw child poverty usually go up. In this case, child poverty went down because of measures that we took.”
Keilar then cut in to ask, “But Jared, let me ask you, you said it, you said Europe’s inflation isn’t as high as ours. So, was Manchin right?”
Bernstein answered, “No, I think that the international comparisons of where inflation is [undermine] this point that somehow U.S. spending was responsible for this. If you look at inflation across advanced economies, I could have cited Canada or Mexico, their inflation rates are about the same as ours. So, if you look across international comparisons, you’ll find inflationary pressures everywhere. Now, we all did different fiscal policy, but what did we all have in common? The pandemic. So, the pandemic had impacts on supply chains. It had impacts on people’s ability to go to work. And of course, that led to supply-side snarls and that boosted inflationary pressures. The thing you have to ask yourself…is, is this country, is this economy in a position of strength to face what’s coming at us, especially compared to other economies that face the same pressures? And I think the answer, if you look at our job market, if you look at our GDP growth, if you look at how household’s incomes are doing, how their savings are doing, you would conclude that we are approaching this moment from a position of strength.”
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