White House: We’re Seeing Inflation Cool, We’ll Likely See Inflation Deceleration Slow

On Wednesday’s broadcast of Bloomberg’s “Balance of Power,” outgoing White House National Economic Council Director Brian Deese touted the recent inflation numbers and stated that as inflation declines, “you’re certainly less likely to see the kind of deceleration in the inflation numbers persist indefinitely.”

Deese stated, “When I look back, I look over the last six months, and I see an economy that has shown more resilience than a lot of people projected in the labor market, an ongoing resilience consumer-wise. … And, at the same time, over that six-month period, a cooling in inflation. There’s more that we need to see on that front, but those two dynamics happening at the same time, I think counsel that we are seeing more optimism and more prospect of the kind of transition to steady and stable growth that the president has now been talking about for some time.” And “I wouldn’t understate the degree to which we’ve seen cooling” in inflation.

Host David Westin then asked, “Where are you on the question about whether we can keep reducing inflation at the current rate? Because some people think, yeah, we can just keep going. Other people think it gets harder and harder as you go down?”

Deese responded, “I really do think that this causes humility and a careful, data-dependent outlook, because the past analogs that we use and the models that we use are continuing to be proven off for the particular circumstances of this crisis and this recovery. When I look at this, I look at — I really try to look at, what are the measures of labor market expansion. It was good to see an increase in labor force participation across time. And so, I think that, as you move down, certainly, you’re certainly less likely to see the kind of deceleration in the inflation numbers persist indefinitely. But then again, we also know that, for example, on the housing side, we are very likely to see an increase in sequential cooling as well. So, I think we have taken the position here for some time that we can see inflation come down without having to give up all of the economic gains we’ve made. I think the data over the last several months is consistent with that view, and certainly, that’s what we want to see. And so, we’re going to keep working on the policy side, on things where we can, to try to help encourage that outcome.”

Follow Ian Hanchett on Twitter @IanHanchett