WEBVTT - Jared Bernstein Talks Inflation Fight; Trump Policies 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.039 --> 0:00:11.400 We're joined on Bloomberg TV and radio by the chairman, 0:00:11.560 --> 0:00:15.240 Jared Bernstein, chair of the White House Council of Economic Advisors. 0:00:15.280 --> 0:00:17.400 It's great to see you. Welcome back. Great to be 0:00:17.600 --> 0:00:18.320 back here with the two. 0:00:18.600 --> 0:00:20.720 This is framed as an exit interview. I don't know 0:00:20.760 --> 0:00:22.400 how that makes you feel, but we'd love to talk 0:00:22.440 --> 0:00:24.520 about a couple of different things. And if that's the case, 0:00:24.960 --> 0:00:27.560 as you pack up your office, I want to start 0:00:27.600 --> 0:00:30.600 with the fight of your life, which I believe is 0:00:30.720 --> 0:00:33.080 the fight you waged against inflation for the last time. 0:00:33.080 --> 0:00:34.600 Oh, I thought you were at my confirmation here. 0:00:34.680 --> 0:00:37.440 I thought maybe picked something else. But I think we 0:00:37.479 --> 0:00:39.479 can agree that's what you've spent the most of your 0:00:39.479 --> 0:00:41.560 time on, and it's what we've spent the most time 0:00:41.600 --> 0:00:43.920 probably asking you about. When you look at a chart 0:00:44.240 --> 0:00:47.319 over the last four years of CPI data, it. 0:00:47.280 --> 0:00:48.200 Looks like a mountain. 0:00:48.440 --> 0:00:50.600 Yeah, you crest at the top of that mountain a 0:00:50.600 --> 0:00:52.159 couple of years ago. And as we look at that 0:00:52.280 --> 0:00:54.959 chart now we'll share it with our viewers on Bloomberg 0:00:55.040 --> 0:00:57.680 TV and on YouTube. I wonder on how that makes 0:00:57.680 --> 0:01:00.640 you feel if it brings back some PTSD traumas and 0:01:00.720 --> 0:01:01.080 some of those. 0:01:01.160 --> 0:01:01.720 Yeah, I believe. 0:01:02.680 --> 0:01:06.360 But also when you look at that, do you think, 0:01:06.600 --> 0:01:09.800 look how much progress we made or how much left 0:01:09.840 --> 0:01:10.880 we had to do both. 0:01:11.920 --> 0:01:14.120 Certainly progress we've made, I mean coming down the other 0:01:14.200 --> 0:01:16.840 side of that mountain was critically important. But you know, 0:01:17.280 --> 0:01:20.320 Kayley and Joe, for us, the fight was never just 0:01:20.400 --> 0:01:23.760 about getting inflation back down. That was absolutely key, and 0:01:23.800 --> 0:01:26.679 we're proud of the work we did to help that. Specifically, 0:01:26.760 --> 0:01:30.399 by the way, the Supply Side Disruption Task Force. 0:01:30.400 --> 0:01:31.840 That's not something you hear a lot about that, but 0:01:31.840 --> 0:01:32.199 we were. 0:01:32.080 --> 0:01:34.680 Probably talking about it back in twenty one. The President 0:01:34.840 --> 0:01:39.160 realized quickly that it was snarled supply chains that helped 0:01:40.120 --> 0:01:43.360 cause that inflationary spike in part along with strong demand 0:01:43.680 --> 0:01:46.360 and unstarling those changs was going to be really important. 0:01:46.600 --> 0:01:52.600 But the thing that the President recognized was that we 0:01:52.640 --> 0:01:55.480 also have to worry about costs the price level, not 0:01:55.680 --> 0:01:59.440 just inflation. And that's why, starting you know, shortly after 0:01:59.480 --> 0:02:02.640 that peak, we started talking about what we were doing 0:02:02.680 --> 0:02:05.120 at lower costs. Because it's one thing to get grocery 0:02:05.120 --> 0:02:07.440 inflation from thirteen percent down to around one one and 0:02:07.440 --> 0:02:10.240 a half percent. That was a huge and important accomplishment, 0:02:10.400 --> 0:02:13.160 But that just means your grocery prices are growing more slowly, 0:02:13.400 --> 0:02:15.440 it doesn't mean they're coming down. And a lot of 0:02:15.440 --> 0:02:19.200 people really wanted more deflation, not just disinflation, So our 0:02:19.280 --> 0:02:22.120 cost cutting agenda was also a critical piece of the 0:02:22.120 --> 0:02:23.000 fight well. 0:02:22.840 --> 0:02:25.200 And your point is well taken on how supply side 0:02:25.240 --> 0:02:28.360 factors did ultimately contribute to the higher price pressures, But 0:02:28.400 --> 0:02:31.480 you mentioned demand there as well, and certainly you're familiar 0:02:31.560 --> 0:02:33.880 with the Republican argument that it was too much fiscal 0:02:33.880 --> 0:02:37.440 stimulus that fuel demand and fueled inflation as a result. 0:02:37.520 --> 0:02:39.239 When you look back on it now, do you think 0:02:39.240 --> 0:02:42.000 the ultimate trade off was worth it keep the economy 0:02:42.240 --> 0:02:44.880 and the labor market in better shape through some of 0:02:44.880 --> 0:02:48.359 those stimulated efforts in exchange for what could have been 0:02:48.360 --> 0:02:51.399 that additional marginal pressure upward on prices. 0:02:51.880 --> 0:02:55.920 I do with the following asterisk or caveat, which is 0:02:55.919 --> 0:02:59.120 that if you look at the trajectory of inflation or 0:02:59.160 --> 0:03:02.880 the cumulative out which the price level grew across every 0:03:02.960 --> 0:03:05.920 g SEM and economy, it's pretty much the same in 0:03:06.000 --> 0:03:08.120 every one of them, and they all had different fiscal 0:03:08.160 --> 0:03:10.840 and monetary policies. So I think it's a mistake to 0:03:10.919 --> 0:03:14.160 assign too much of that increase to fiscal policy, and 0:03:14.200 --> 0:03:18.480 I think the Republican argument is fundamentally undermined by that 0:03:18.639 --> 0:03:20.120 international comparison. 0:03:20.919 --> 0:03:23.320 You know. That said, the other. 0:03:23.160 --> 0:03:25.120 Part of your the way you teed up the question 0:03:25.240 --> 0:03:26.760 is really important, which. 0:03:26.560 --> 0:03:27.600 Is what did we get? 0:03:27.960 --> 0:03:31.520 So we are now handing off one of the strongest 0:03:31.520 --> 0:03:36.000 economies on record, and by some really important measures, whether 0:03:36.040 --> 0:03:38.960 it's the number of jobs, you know, a four percent 0:03:39.000 --> 0:03:43.400 average unemployment over this administration, that's an historical achievement, and 0:03:43.800 --> 0:03:46.000 of course the stock market doing great in the past 0:03:46.000 --> 0:03:49.120 couple of years. All of those indicators do take you 0:03:49.240 --> 0:03:52.800 back to punching back as hard as we could against 0:03:52.840 --> 0:03:55.720 the pandemic induced recession. So I want to be very 0:03:55.760 --> 0:03:59.120 careful about not suffering from any of the amnesia about 0:03:59.160 --> 0:04:01.520 what was going on in January twenty one when we 0:04:01.560 --> 0:04:04.240 got there, and how our policies helped get this economy 0:04:04.280 --> 0:04:06.200 back to full employment where it's been ever since. 0:04:06.240 --> 0:04:09.800 You've been very disciplined about staying independent from the FED 0:04:09.920 --> 0:04:12.280 and not answering our questions about the FED for the 0:04:12.360 --> 0:04:15.840 last four years. I salute you for your consistency every 0:04:15.840 --> 0:04:18.159 now and then we got a little bit of a crackout. 0:04:17.760 --> 0:04:20.800 I just wonder, I don't know if you feel more 0:04:21.400 --> 0:04:23.919 or less shackled now than you did in the throes 0:04:23.960 --> 0:04:27.120 of the administration, But did you feel in sync with 0:04:27.200 --> 0:04:30.080 the FED from transitory to the first cuts. 0:04:30.440 --> 0:04:32.560 Well, first of all, people ask me, right now, you know, 0:04:32.560 --> 0:04:34.880 what are you going to do after this job. 0:04:35.160 --> 0:04:36.240 One of the things I say is I'm going to 0:04:36.240 --> 0:04:36.680 talk about the. 0:04:36.640 --> 0:04:43.719 FED, So hopefully here for certainly going to remain pretty 0:04:43.800 --> 0:04:46.279 quiet about the FED as long as I'm a still chair. 0:04:46.160 --> 0:04:48.839 Of the CEA. I mean, look, I think one. 0:04:49.120 --> 0:04:52.960 Place I take your question is is just how much 0:04:53.000 --> 0:04:54.720 we valued FED independence. 0:04:54.720 --> 0:04:58.800 And that wasn't just some weird kind of idea we had. 0:04:59.320 --> 0:05:02.479 We're just acutely aware that economies have been brought to 0:05:02.520 --> 0:05:05.839 their neees by compromising the independentive essential bank. And that's 0:05:05.960 --> 0:05:10.279 largely because of unforced errors on inflation. Now in some cases, 0:05:10.279 --> 0:05:12.320 I think, I think there are many critics who worry 0:05:12.320 --> 0:05:16.000 about the incoming Trump administration's policies in the context of 0:05:16.000 --> 0:05:19.520 being inflationary, whether it's deportation or tariffs or lots of 0:05:19.560 --> 0:05:21.640 tax cuts. And you know, I'm not going to go 0:05:21.680 --> 0:05:23.320 there myself. I want to give these guys a chance. 0:05:23.360 --> 0:05:24.120 Let's see what they do. 0:05:24.279 --> 0:05:24.920 They don't want. 0:05:24.839 --> 0:05:26.920 Higher inflation or interest rates. I think we can be 0:05:26.960 --> 0:05:29.960 pretty clear on that. But once you start messing around 0:05:30.000 --> 0:05:33.360 with FED independence, I think you're making a pretty fatal 0:05:33.400 --> 0:05:35.159 mistake in terms of controlling inflation. 0:05:35.480 --> 0:05:37.880 Well, you just said they don't want higher inflation. But 0:05:37.920 --> 0:05:39.920 do you think ultimately when you look at the layout 0:05:39.960 --> 0:05:42.320 of the policies at least that they've outlined, if not 0:05:42.480 --> 0:05:44.680 into the granular details that we may have yet to 0:05:44.720 --> 0:05:47.599 get once Trump takes office, that that is what is 0:05:47.680 --> 0:05:51.120 going to result, is that it's going to lead to 0:05:51.240 --> 0:05:53.279 a new spike upward in prices. 0:05:53.360 --> 0:05:55.839 Kayley, again, I want to give this incoming team the 0:05:55.839 --> 0:05:57.600 benefit of the DOABTA. I know some of these folks, 0:05:57.640 --> 0:06:01.239 they're good economists. They don't want to generate higher inflation 0:06:01.279 --> 0:06:04.040 and higher interest rates. But if you do look at 0:06:04.080 --> 0:06:10.760 the impact of say sweeping tariffs or deportations, or fiscal 0:06:10.800 --> 0:06:14.640 stimulus through unnecessary high end tax cuts really also hurting 0:06:14.640 --> 0:06:18.320 the economy's fiscal outlook, all of those, of course are inflationary. 0:06:18.320 --> 0:06:20.840 And then if you add in compromising FED independence, you've 0:06:20.839 --> 0:06:22.560 got a real problem on your hands. I don't think 0:06:23.200 --> 0:06:25.080 they want to go there. 0:06:25.320 --> 0:06:26.440 I will say the following. 0:06:27.960 --> 0:06:31.280 If there are those who think that, hey, we did 0:06:31.320 --> 0:06:35.720 tariffs in our first administration and it didn't hurt us. 0:06:35.720 --> 0:06:39.440 On the inflationary side, twenty twenty five is a lot 0:06:39.480 --> 0:06:43.240 different than twenty seventeen. Right there, you're looking at an 0:06:43.279 --> 0:06:47.080 economy where you were missing inflation from the downside for 0:06:47.240 --> 0:06:49.560 something like five or ten years. There, you're looking at 0:06:49.560 --> 0:06:52.920 an economy where interest rate yields were very low. Now 0:06:52.960 --> 0:06:55.360 you're talking about an economy where inflation is making its 0:06:55.400 --> 0:06:58.400 bumpy way path back to target and yields are of 0:06:58.440 --> 0:07:00.840 anything going the other way. This is a very different 0:07:00.880 --> 0:07:04.120 climate to be considering those kinds of ideas. And I 0:07:04.160 --> 0:07:06.400 would say in that regard, they have fewer degrees of freedom. 0:07:06.520 --> 0:07:07.520 And again I think they know. 0:07:07.560 --> 0:07:10.280 That independence, though as a as a principle is something 0:07:10.320 --> 0:07:12.760 that some would argue is being challenged right now by 0:07:12.800 --> 0:07:16.000 this incoming administration. The man who was just experiencing his 0:07:16.080 --> 0:07:20.560 confirmation hearing earlier today, Scott Besson, the potential future Treasury secretary, 0:07:20.760 --> 0:07:23.040 floated the idea of a shadow fed share is that 0:07:23.120 --> 0:07:24.080 our next reality? 0:07:24.320 --> 0:07:24.880 I don't think so. 0:07:25.240 --> 0:07:28.440 Again, I think there are things one says in sort 0:07:28.440 --> 0:07:30.720 of the think tank world. Yeah, you know, the Bible 0:07:30.720 --> 0:07:32.560 says when as a child, I spake as a child. 0:07:32.560 --> 0:07:34.400 But then when he chaired the CEA, I had to 0:07:34.400 --> 0:07:35.400 get a lot more serious. 0:07:35.440 --> 0:07:37.840 And so I think I think of in this team 0:07:37.880 --> 0:07:38.760 the benefit of the death. 0:07:39.640 --> 0:07:43.160 I think that, you know, I want obviously, that's what 0:07:43.720 --> 0:07:45.720 I've said that numerous times, and I want to pursue that. 0:07:46.040 --> 0:07:49.640 But I also think that, uh, the idea of hitting 0:07:50.040 --> 0:07:53.600 this economy with higher in higher inflation, I think any 0:07:53.760 --> 0:07:55.800 economists worth their salt know that that's not where we 0:07:55.840 --> 0:07:56.240 want to go. 0:07:56.720 --> 0:07:59.160 We heard the President in his farewell address last night, 0:07:59.240 --> 0:08:02.320 also say that he wishes the incoming administration's success because 0:08:02.360 --> 0:08:04.560 he wants the country to succeed, and just a few 0:08:04.560 --> 0:08:06.800 minutes later, he went on to warn of what he 0:08:06.880 --> 0:08:10.600 sees as a burgeoning American oligarchy, talking about the concentration 0:08:11.200 --> 0:08:14.800 of wealth and power. And I wonder, from an economic standpoint, 0:08:14.840 --> 0:08:18.160 how you do view that this widening inequality we are 0:08:18.200 --> 0:08:19.440 seeing take place in America. 0:08:19.440 --> 0:08:22.160 Well, that's exactly how I view it. And I'm glad 0:08:22.160 --> 0:08:24.280 you went there, because when I heard the President talking 0:08:24.320 --> 0:08:26.440 about that It brought me back to one of the 0:08:26.480 --> 0:08:29.760 first meetings I had with Joe Biden, or first extended meeting, 0:08:30.080 --> 0:08:32.520 which was in December of two thousand and eight when 0:08:32.520 --> 0:08:34.600 he was the vice president elect, who has at his 0:08:34.640 --> 0:08:38.079 house in Delaware, and he was looking for a chief economist. 0:08:38.160 --> 0:08:41.400 And I rumbled in there and he pulled a graph 0:08:41.400 --> 0:08:43.480 out of his pocket, one that I had made. It 0:08:43.679 --> 0:08:46.480 folded piece of paper. He unfolded it and it showed 0:08:46.480 --> 0:08:48.599 productivity going up, up up. This is a graph that 0:08:48.640 --> 0:08:51.600 I'd made with Larry Michelle, the great labor economist and 0:08:52.120 --> 0:08:55.640 median wages meeting incomes flat. And he pointed the gap 0:08:55.679 --> 0:08:57.520 between the two of those, and that's inequality. 0:08:57.559 --> 0:09:00.560 He said, This is what I want our work to address. 0:09:00.600 --> 0:09:02.920 I want to close that gap and bid nomics to 0:09:02.960 --> 0:09:05.960 this day I describe is that if you're helping to 0:09:06.080 --> 0:09:08.360 bake the pie, you want to get a fair slice. 0:09:08.520 --> 0:09:12.920 So to me, what he said about about this threat 0:09:12.960 --> 0:09:16.520 of excessive wealth concentration is part and parcel of his 0:09:16.640 --> 0:09:20.920 concern about the regular working middle class Americans who build 0:09:20.920 --> 0:09:23.720 this economy every day getting their fair share of the growth. 0:09:23.800 --> 0:09:25.839 Yet it must have frustrated him to not see them 0:09:25.880 --> 0:09:29.320 connect with his vision throughout polling. It was obviously a 0:09:29.360 --> 0:09:31.880 campaign that he dropped out of with the economy as 0:09:31.920 --> 0:09:33.719 the number one issue here. So what was the most 0:09:33.800 --> 0:09:36.160 frequent question? I mean, you would ask you, Jared, what 0:09:36.200 --> 0:09:39.080 was he actually waking up worried about when that was 0:09:39.160 --> 0:09:40.480 the dynamic you were dealing. 0:09:40.520 --> 0:09:43.680 Well, interestingly, you say frustrating, and it's an interesting point 0:09:43.679 --> 0:09:46.079 that makes me think back to conversations we had. He 0:09:46.200 --> 0:09:50.080 was constantly bolstering his staff, including me, saying, look, I 0:09:50.080 --> 0:09:52.880 know it's frustrating, you know, to be seeing this out there, 0:09:52.880 --> 0:09:55.880 but you know I've been through this before, I've been 0:09:56.320 --> 0:09:58.640 to this rodeo, and we just have to keep pressing. 0:09:58.679 --> 0:10:01.960 We have to keep getting the economic job done on 0:10:02.000 --> 0:10:04.840 behalf of the American and middle class. And so he 0:10:05.360 --> 0:10:08.800 was obviously very gratified to see. And this is something 0:10:08.800 --> 0:10:10.920 he and I worked on from the very beginning, going 0:10:10.960 --> 0:10:13.199 all the way back to you know, throughout our relationship 0:10:13.320 --> 0:10:15.960 was the idea that if you run a full employment economy, 0:10:15.960 --> 0:10:18.680 the benefits of the growth that you're helping you generate 0:10:18.720 --> 0:10:20.600 will disproportionately reached bottom half. 0:10:20.640 --> 0:10:22.000 Well, look what's happened to wages. 0:10:22.200 --> 0:10:25.199 I know you've talked about this and documented this at Bloomberg. 0:10:25.559 --> 0:10:27.280 Low wages did the best. 0:10:27.360 --> 0:10:29.640 You know, the low age growth was the strongest that 0:10:29.679 --> 0:10:33.319 comes right out of this running this biden esque full 0:10:33.360 --> 0:10:34.280 employment economy. 0:10:34.400 --> 0:10:36.240 The black unemployment rate over Joe. 0:10:36.120 --> 0:10:39.280 Biden's four years was the lowest on record of any 0:10:39.320 --> 0:10:40.320 four year term. 0:10:40.520 --> 0:10:42.320 All right, that's huge. 0:10:43.720 --> 0:10:46.600 Support for I think the president's theory of the case. 0:10:46.800 --> 0:10:49.880 Now you can ask about the disconnect between that and politics. 0:10:49.920 --> 0:10:52.360 I think that takes us back to the price level 0:10:52.360 --> 0:10:56.520 and that discussion. But the President was well aware of 0:10:57.360 --> 0:11:02.400 this architecture of how the economy works and recognize the progress. 0:11:02.000 --> 0:11:02.560 We made on it. 0:11:03.160 --> 0:11:05.199 And we'll leave it on that note. Jared Bernstein, the 0:11:05.240 --> 0:11:08.040 outgoing chair of the Council of Economic Advisors, thank you 0:11:08.080 --> 0:11:10.320 so much for joining us. Thank you on Bloomberg TV, 0:11:10.600 --> 0:11:11.240 at the radio.