Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along
Speaker 1: with Jonathan Farrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. Right now, from
Speaker 1: the White House, the economist Jared Bernstein, of course a
Speaker 1: member of the White House Council on Economic Advisors. Dr Bernstein,
Speaker 1: what is so charming about your work out of Hunter
Speaker 1: College in Colombia, as you've always gone for the societal
Speaker 1: effect of America. How does the Biden administration sustain the
Speaker 1: confidence of society given the shock of these these false
Speaker 1: steps in our in our clearing from the pandemic. Yeah,
Speaker 1: it's a it's an important question. And I do want
Speaker 1: to make clear that while you appropriately called me Dr Bernstein,
Speaker 1: and I'm not a medical doctor, and uh, we have
Speaker 1: a deep staff of medical authorities and public health officials
Speaker 1: who are just pouring over this information. Uh. On your question,
Speaker 1: which again it's it's always a joy to talk to
Speaker 1: someone who kind of knows the history of what we're
Speaker 1: talking about here. Um, if you look at the polling
Speaker 1: on the infrastructure proposal, north of seventy of Americans are supportive,
Speaker 1: and more than fifty of Republicans are. And the reason
Speaker 1: is is when it comes to the fact that there
Speaker 1: are four hundred thousand schools and child care centers where
Speaker 1: lead leeches into the water. There's thirty million people who
Speaker 1: don't have access to to fast broadband. Uh, there are
Speaker 1: essential workers facing poverty. Uh. These are issues that are
Speaker 1: well understood by so many people outside of the Beltway
Speaker 1: in terms of their necessity. I'm not just talking about voters.
Speaker 1: I'm also talking about governors and mayors who understand the
Speaker 1: cost of disinvestment in infrastructure. Jared, what does a change
Speaker 1: in the transition of a hundred days or whatever the
Speaker 1: number of days is from the Trump administrations take on
Speaker 1: science from where you sit versus a Biden administration. This morning,
Speaker 1: there's going to be a press conference, I believe at
Speaker 1: ten am. Tell us the science that you observe. It's
Speaker 1: six Pennsylvania Avenue. Yeah. From the moment that President Biden
Speaker 1: took office. UH, you know, facts were very much uh
Speaker 1: back in the mix, and science is a huge part
Speaker 1: of that. UM. Obviously Dr Faucci has continued to play
Speaker 1: a key role. But this has always been a fact
Speaker 1: in science driven area of inquiry for for our administration.
Speaker 1: And that's precisely what's occurring right now as we speak.
Speaker 1: On not going to lean into it because you know,
Speaker 1: I want to stay in my economics lane, but that's
Speaker 1: the fact of the case. That's the responsible thing to do,
Speaker 1: and we'd expect nothing less from you, sir. But we
Speaker 1: do have to talk about the economy and the reopening
Speaker 1: effort as it bears to the context around the vaccination
Speaker 1: effort as well. So John, let's go there. Does this
Speaker 1: jeopardize the vaccination timeline of the administration of potentially reopening
Speaker 1: this economy in any way, shape or form. It is
Speaker 1: a totally fair question to which I don't know the answer,
Speaker 1: and I don't think anyone else does either. I think
Speaker 1: before we can make the kinds of timing determinations that
Speaker 1: you're asking about, we have to understand how disruptive this is,
Speaker 1: and we just don't know yet. It is the case,
Speaker 1: as you well know. Again, I think the rescue plan,
Speaker 1: I don't think we know the rescue plan UH played
Speaker 1: a key role in producing and distributing vaccines in helping
Speaker 1: us really accelerate the curve of getting shots and arms.
Speaker 1: A hundred and fifty million shots and arms a hundred
Speaker 1: fifty million checks out the door. So that that's the
Speaker 1: rescue plan and action. But it's a fair question to
Speaker 1: which we don't have an answer yet, and it wouldn't
Speaker 1: be prudent for me to speculate given the information I
Speaker 1: just say, the lack of information I have at this point.
Speaker 1: It would also did something Counse didn't it. It It feeled
Speaker 1: a big debate about inflation. And we'll get that data
Speaker 1: in about thirty three minutes, sir, So let's talk about that,
Speaker 1: because I imagine that was really the impetus to hear
Speaker 1: from the White House today around the inflation data in America.
Speaker 1: I've been asking this question continually, we all have on
Speaker 1: this program. The base case the consensus from you, Jared
Speaker 1: is transitory from the Federal Reserve transit tree. How would
Speaker 1: you know if you're wrong? Yeah, so that's a great question.
Speaker 1: And if you look at the document that myself and
Speaker 1: my colleague Journey Todeski wrote yesterday, it's on the white
Speaker 1: House Blog. We had a section that's gotten a little
Speaker 1: bit less attention than the base effects and the pent
Speaker 1: up supply issues, the transitory issues. We talked about inflationary
Speaker 1: expectations for long term inflationary uh for for understanding of
Speaker 1: a long term of inflations trajectory. You really it's really
Speaker 1: an an expectations game. And one of the things we
Speaker 1: put in there people may not have had their coffee yet,
Speaker 1: so I apologize if I'm waxing too statistical. Is a
Speaker 1: something called the Common Index of Inflation Expectations. This is
Speaker 1: a kind of a blending of over twenty different indicators
Speaker 1: of inflation expectations. We borrowed the technology from the Federal Reserve,
Speaker 1: and it does show that expectations have been rising, but
Speaker 1: from historically low levels to more normal ones. So I
Speaker 1: think that kind of an index, which incorporates so many
Speaker 1: different household survey measures, market measures, is the right way
Speaker 1: to think about future pressures, whether whether whether the anchor
Speaker 1: maintains or is nudged. What would you say, though, Jared,
Speaker 1: to people who pushed back on your idea of transitory
Speaker 1: and say we're doing something different. This is an experiment
Speaker 1: of helicopter money, dropping cash into people's bank accounts while
Speaker 1: keeping rates very low. What's your response, Well, in fact,
Speaker 1: we've done this sort of thing before, and in fact,
Speaker 1: not only did we see unemployment full to fifty year
Speaker 1: lows with a fiscal stimulus that was highly procyclical in
Speaker 1: the last expansion, but inflation continued to miss its target
Speaker 1: from the downside. So I think it's really not necessarily
Speaker 1: mystery or magic, and you simply have to look at
Speaker 1: the indicators. We are, as we tried to express in
Speaker 1: that blog yesterday, you know, pretty obsessively monitoring, engaging UH
Speaker 1: the indicators to try to understand the dynamics between heat
Speaker 1: which we expect, whether it's the rescue plan or the
Speaker 1: job's plan, Helping families and businesses get the relief that
Speaker 1: they need, Helping states and localities get the resources they
Speaker 1: need safely reopening schools. All of that is going to
Speaker 1: contribute to economic growth, and it's going to have some
Speaker 1: impact on prices as we're seeing. But the key point
Speaker 1: is distinguishing between heat and overheat, and the overheat story,
Speaker 1: which we argue is something that we're going to completely
Speaker 1: watch carefully, but is a lower risk probability than uh.
Speaker 1: The importance of the other measures I've talked about that
Speaker 1: has to be gauged as well, and I talked about
Speaker 1: how I believe it should be done. There's a question
Speaker 1: about confidence to about the confidence to go out and
Speaker 1: spend at one point eight trillion dollar cash pile. How
Speaker 1: concerned are you about the issues around vaccines affecting that
Speaker 1: confidence and slowing growth more materially? What is going to
Speaker 1: be the measure for you on that front. We're gonna
Speaker 1: have to continue to look as we do at not
Speaker 1: just the monthly and the quarterly UH data on consumer spending,
Speaker 1: on travel, on seating at restaurants. UM, We're gonna have
Speaker 1: to look at the daily and the weekly implications of this.
Speaker 1: And I think that's been actually a real advance in
Speaker 1: in economic UH study in this in this period, which
Speaker 1: is the availability of very high frequency data that we
Speaker 1: now have enough to link it up to the more
Speaker 1: UH traditional indicators, and so we can know that the
Speaker 1: credit card data gives us information about consumer spending and
Speaker 1: what it was showing was increased confidence, increased re engaging
Speaker 1: with commerce. UH and UH you know the kinds of
Speaker 1: price effects that we've been discussing so far UH so
Speaker 1: so far, UH, we we like what we're seeing in
Speaker 1: in that regard, John, ifor one as a journalist, appreciate
Speaker 1: the increased transparency. We've caught up many times together. Now
Speaker 1: over the last several months, you put out that blog
Speaker 1: closed on inflation as well. I do you wonder, and
Speaker 1: this is a delicate question, whether you're worried about losing
Speaker 1: control of the narrative around inflation over the next comple
Speaker 1: of months. I don't know. I mean, I I don't
Speaker 1: think it's really a narrative. I guess I don't really
Speaker 1: think about it in sort of control of the narratives story,
Speaker 1: And maybe I should. I think about it much more
Speaker 1: in terms of the substance of the pressures on prices. Uh,
Speaker 1: and just speaking, you know, honestly and transparently and truthfully
Speaker 1: about what we judge to be the case. Um. The
Speaker 1: inflation dynamics are something I have studied for many decades,
Speaker 1: and you know, I would argue that, you know, I
Speaker 1: was one, not not the only, not the only one.
Speaker 1: I was one of the folks who argued that the
Speaker 1: natural rate of unemployment, you know, it was really many
Speaker 1: percentage points lower than was previously thought, and that helped
Speaker 1: us get to a place where we were having a
Speaker 1: much more equitable and much more racially rewarding job market.
Speaker 1: When we got to truly full employment, and as we predicted,
Speaker 1: inflation pressures were quiescent. So I think we've learned a
Speaker 1: lot about this area of macro policy substantively, and I
Speaker 1: think we just have to continue investigating it. Jared, there's
Speaker 1: a lot of fancy talk here and inflation, and we
Speaker 1: can partition and have a bow tie analysis. You know
Speaker 1: what it's about a bag of groceries. I've had more
Speaker 1: comments and viewers and listeners in the last forty eight
Speaker 1: hours on food inflation then I've had in the last
Speaker 1: three years. Is it here to stay? Yeah? This is
Speaker 1: one of the ways economists can really piss off normal
Speaker 1: You got that right, and you're leaving the charge so shape.
Speaker 1: But tell us about food inflation. You know, when I
Speaker 1: talked to my wife about core inflation, I explained that
Speaker 1: that leaves out food and gas prices. She just shakes
Speaker 1: her head and looks at me, like, what the heck
Speaker 1: are you talking about? But in fact, that is the
Speaker 1: gauge that economists and the Federal Reserve used to try
Speaker 1: to get at the underlying signal because food and energy
Speaker 1: are much more volatile energy particularly, but food as well
Speaker 1: is very much a global market. So if we want
Speaker 1: to understand domestic price pressures, we really do have to
Speaker 1: look at the core look in terms of food inflation. Uh,
Speaker 1: this is some of the sectual dynamics that again we
Speaker 1: wrote about yesterday, and we do expect to see pressures
Speaker 1: in some face to face services, say restaurants, food away
Speaker 1: from home. But I don't mean to interrupt, but we're
Speaker 1: gonna run out of time. How is the Biden administration
Speaker 1: and for that matter, how are the elites of Washington
Speaker 1: going to react to four percent plus food inflation? Lisa A.
Speaker 1: Bramowitz is crushed by four percent plus food and got
Speaker 1: that right. Yeah, Well, first of all, you know, we're
Speaker 1: not gonna I'm not gonna lean into the federal reserves
Speaker 1: lane because it's uh, it's their job to think about,
Speaker 1: you know, these sectoral impacts on prices. I think where
Speaker 1: we're coming from. We have to look at the American
Speaker 1: people's nutritional needs and make sure they're meeting them. And
Speaker 1: both in the Rescue Plan and in forthcoming ideas that
Speaker 1: you're gonna hear about in the Family's Plan. Um, we
Speaker 1: are taking very seriously, UH the ability of people to
Speaker 1: meet their nutritional needs. It's something that we think about
Speaker 1: a lot. We follow the Pulse survey, which shows how
Speaker 1: many people even now as UH we as the economy
Speaker 1: very clearly recovers from the pandemic induced for session, we
Speaker 1: have too many people facing nutritional shortfalls, and we have
Speaker 1: a really effective program UH SNAP are formerly called food Stamps,
Speaker 1: which meets those needs. And and we've we've extended that
Speaker 1: program and the rescue plan and some of the prior
Speaker 1: fiscal packages, and we will continue to make sure that
Speaker 1: SNAP meets people's nutritional needs. Jared always appreciate kailed that
Speaker 1: Jared Fernstein, White House Council of Economic Advice as men.
Speaker 1: But joining us from the White House and important conversation
Speaker 1: right now a joy. On very short notice. Peter Hotez
Speaker 1: joins this Dean of National School of Tropical Medicine, Baylor
Speaker 1: College of Medicine. Dr Hotez has just been such a
Speaker 1: support to us on clear thinking through this pandemic. Peter Hotez,
Speaker 1: somewhere buried in your distinguished and extinguished CV is hematology.
Speaker 1: It is ignored by so many in virology and bacteriology.
Speaker 1: And as the effect of all this upon our blood,
Speaker 1: give us a quick synopsis of the hematology of blood
Speaker 1: clots to these vaccines. Well, Tom, we don't know the
Speaker 1: full story yet, but there is an emerging story and
Speaker 1: it's coming out in papers like the New England Journal
Speaker 1: of Medicine last week and others. And it has to
Speaker 1: do with the fact that the two major AD no
Speaker 1: virus based vaccines, and that's astra Zeneca and J and
Speaker 1: J and not the mr Anda vaccines, not the other technologies. Um,
Speaker 1: the two, the two major AD no virus vaccines by
Speaker 1: the pharma companies, seem to be inducing an immune response
Speaker 1: and in some mechanism that we don't fully understand, that's
Speaker 1: activating an antibody response to platelets which are associated with
Speaker 1: blood clotting, and this is causing platelet activation and then
Speaker 1: these thrombotic events which unfortunately are happening in the in
Speaker 1: the veins draining the brain. That's causing cerebral thrombosis, which
Speaker 1: is a very severe and life threatening conditions. So to
Speaker 1: be clear here, this is the idea of a vaccine
Speaker 1: coming over into a cardiac event. As you say, the
Speaker 1: venus system coming out of the brain being blocked. The
Speaker 1: number six out of six point eight million. Does that
Speaker 1: give you pause or is this just a risk at hand? Well,
Speaker 1: those are the numbers coming out of the US for
Speaker 1: the J and J vaccine, for the astra zeneca adona
Speaker 1: virus vaccine, it's about one and a hundred thousand to
Speaker 1: maybe one and two hundred thousand, So they are rare
Speaker 1: events um and and what countries are going to do
Speaker 1: about this will depend on the availability of other vaccines.
Speaker 1: You know, the US, we've got a pretty big portfolio.
Speaker 1: We've got two m R and A vaccines from from
Speaker 1: a Visor and Maderana. We have a novavax vaccine coming along.
Speaker 1: They may make a different decision than a country that's
Speaker 1: entirely dependent on ad no virus vaccines. It's it's going
Speaker 1: to be risk versus benefit. But you know, it's the problem.
Speaker 1: The other problem, of course, is this is not happening
Speaker 1: in a vacuum. It's happening in the background of a
Speaker 1: very aggressive anti vaccine lobby that's piling on now globally,
Speaker 1: and so that could easily derail a lot of efforts.
Speaker 1: I'm particularly concerned about African and Latin American countries which
Speaker 1: backed themselves into a corner and um in the sense
Speaker 1: that they became totally dependent on these add no virus
Speaker 1: vectored vaccines. In some cases this is also true the
Speaker 1: GAMA lay a Russian vaccine which is also an adnavirus vaccine,
Speaker 1: but we don't have any information about that. So so
Speaker 1: the impact, especially on the world's low and middle income countries,
Speaker 1: could be really devastating, and I'm really upset about what's
Speaker 1: going on. Dr Hotez, this is where I wanted to go,
Speaker 1: the communication of some of the details as we learn
Speaker 1: about potential side effects. Do you think that the FDA,
Speaker 1: that the CDC UH, that the European health officials should
Speaker 1: have waited before disclosing some of this information, or do
Speaker 1: you think that it's important to shore up the feeling
Speaker 1: of full transparency. You know, it's it's you could argue
Speaker 1: it either way. I think they made the right call
Speaker 1: because you know, one of the things that's really important
Speaker 1: is to reassure the public, both in Europe and the
Speaker 1: United States and globally that the regulatory bodies have the
Speaker 1: pharmaco vigilance, the monitoring in hand and basically I mean
Speaker 1: some pay in some ways the American people in Europe
Speaker 1: and should be reassured that are there are regulatory systems,
Speaker 1: are global governance of vaccines is intact and can pick
Speaker 1: up rare events that wouldn't necessarily show up in the
Speaker 1: Phase three trials. So you know, it's a glass half full,
Speaker 1: half empty. I think they made the right call and
Speaker 1: and now it's a matter of how you navigate the
Speaker 1: next few weeks because we don't have a lot of alternatives,
Speaker 1: especially from many countries. Dr Hotel is going back to
Speaker 1: your other point about the developing world that potentially relies
Speaker 1: on these non mRNA vaccines. How much do you think
Speaker 1: that these types of communications, these news flashes end up
Speaker 1: deterring that effort to vaccinate the developing world. Yeah, I
Speaker 1: think it's a big deal. You know, I've been up against,
Speaker 1: going up against the anti vaccine lobby for for years
Speaker 1: and years because I have a daughter with autism and
Speaker 1: I wrote a book called Vaccines Did Not Cause Rachel's Autism,
Speaker 1: which made me public enemy number one. So I know
Speaker 1: what they're capable of, and for years I've been saying, look,
Speaker 1: don't think this is going to stay walled off to
Speaker 1: North America and Europe. This thing is going to go
Speaker 1: lobal and it has. We're starting to see now those
Speaker 1: same anti vaccine messages that's coming out of the us
Speaker 1: UH and now we're finding it in Africa and Latin America.
Speaker 1: And remember what the other reason we're seeing this is
Speaker 1: the Putin government has this has been reported by US
Speaker 1: and British intelligence has been piling on with this whole
Speaker 1: systematic program of what's been called weaponized health communications, trying
Speaker 1: to destabilize democracies with anti vaccine, anti science messages and
Speaker 1: targeting scientists. So this is this is another big issue. Peter,
Speaker 1: give us an update on India, because the numbers there are,
Speaker 1: the mathematics is not good right now. Maybe not as
Speaker 1: bad as Brazil, but it's there. You mentioned Gamma lay
Speaker 1: or the spot Nick vaccine as well. Would you take
Speaker 1: the spot Nick vaccine? Well, not if I had other alternatives.
Speaker 1: And the reason is because that vaccine has not gone
Speaker 1: through stringent regulatory a stringent regulatory authorities but defined by
Speaker 1: the w h OH. It's not gone through w h
Speaker 1: O pre qualification, so there are a lot of unknowns
Speaker 1: about it now in India. What we're doing is are
Speaker 1: we're accelerating our vaccine with biological ian Hyderabad. They're preparing
Speaker 1: one point two billion doses. This is an older school
Speaker 1: technology or combin and protein vaccine that so far as
Speaker 1: looking really good and hopefully that might fill some of
Speaker 1: the gaps in Africa and Latin America and globally. Short
Speaker 1: notice Peter Hotel this morning after this news on Johnson
Speaker 1: and Johnson. He is dean of the National School Tropical Medicine,
Speaker 1: Baylor College. I'm pose and joy this now paying US
Speaker 1: an institute President, Adam. Let's just start that set the
Speaker 1: stage for US for its inflation print in about two
Speaker 1: as in thirty minutes. What are you looking for set?
Speaker 1: Thanks for having me, Johnson. I think I'm looking for
Speaker 1: a lot of US signifying nothing, because this inflation print
Speaker 1: is really about technical things like base effects. Just when
Speaker 1: you bounce back from the kind of shutdown we had,
Speaker 1: you were just going to end up with readings of inflation.
Speaker 1: You're also going to have these short term bottlenecks. As
Speaker 1: you LESA, we're joking about the word transitory. The transitory
Speaker 1: issue is really going to come in two. That's where
Speaker 1: the real FED debate is. That's where the focus should
Speaker 1: be and Frankly, that's where Jared Bernstein, representing the White
Speaker 1: House should be talking. The fact that there's going to
Speaker 1: be some inflation for the next few months showing up
Speaker 1: in non core which which our headline, which Tom points out,
Speaker 1: is not going to worry. You're right that the Fed
Speaker 1: is acting like they're worried. They're trying to get ahead
Speaker 1: of this, but people shouldn't worry. The inflation study that
Speaker 1: we have is partitioned and impose it into services and
Speaker 1: goods inflation. Is that a correct study. It's a correct
Speaker 1: first cut, but it's not a sufficient cut. Tom. As
Speaker 1: you know, Jim Stock from Harvard and various people in
Speaker 1: the Federal Reserve System have been looking at breakdowns inflation
Speaker 1: into bigger components, um, excuse me, smaller components that still
Speaker 1: significant ones. I think that the two key components we
Speaker 1: look at are, as Jonathan mentioned, wages, because that's ultimately
Speaker 1: what we care about, both in the sense of its
Speaker 1: own terms and in the sense that that's the one
Speaker 1: thing that does lead to future headline inflation. And the
Speaker 1: other one, which I've been emphasizing for the last couple
Speaker 1: of weeks publicly, is healthcare inflation. That healthcare is the economy.
Speaker 1: It's one of the services, whether it is genuinely pent
Speaker 1: up demand people who put off procedures they considered elective
Speaker 1: amidst the pandemic, and which there will be a shortage
Speaker 1: of available supply, so either they'll get rationed by people
Speaker 1: waiting a lot longer or crisis will rise. So to me,
Speaker 1: it's wages and healthcare of the subcomponents you really want
Speaker 1: to focus on. When do we know whether the wage
Speaker 1: inflation that we're starting to hear about with some labor shortages,
Speaker 1: whether it's transitory as well, or whether that has longer
Speaker 1: lasting legs. It's a really good question, Lisa, and there's
Speaker 1: no simple answer because wages, as we know, have been
Speaker 1: getting compressed for decades. Now. I don't mean there's been
Speaker 1: no growth, but the share of GDP growth going to
Speaker 1: wages has been way down versus preceding decades. So there's
Speaker 1: some way you could have wages growth without it necessarily
Speaker 1: turning into inflation if basically workers get to take back
Speaker 1: some of the money the capital has been holding onto um.
Speaker 1: And that's hard for the FED to discern the difference,
Speaker 1: both because you don't get the data until later and
Speaker 1: because it looks very political, so there's no easy call
Speaker 1: on that. I'm afraid Dr Posy. We like to get
Speaker 1: out in front of the zeit guy. Sometimes we succeed,
Speaker 1: sometimes we fail. Right now I'm going to succeed and
Speaker 1: anticipate your essay and Foreign Affairs Magazine folks, this will
Speaker 1: be out pretty much any day here for the May issue.
Speaker 1: And you speak of the nostalgia. All of us have.
Speaker 1: John Farrell's incredibly nostalgic. Lisa Bramos just based in nostalgia,
Speaker 1: and we're all doing it about trying to find in America,
Speaker 1: trying to find an Atlantic policy from another time and place.
Speaker 1: What does it mean for our viewers and our listeners
Speaker 1: as we wax nostalgic? Thank you for citing my forthcoming
Speaker 1: article Tom and Foreign Affairs. What I mean when I
Speaker 1: talk about the price of nostalgia is this fixation that
Speaker 1: American politicians have on heavy metal, on men bashing machines,
Speaker 1: running running tough fisheries, all these sorts of visuals that
Speaker 1: you see on the Bruce Springsteen jeep commercials about what
Speaker 1: is the important good way to have a good middle
Speaker 1: class job. And it's nostalgia because it's misplaced because those
Speaker 1: kinds of jobs, there's only so many of those. Even
Speaker 1: in the best of times, you're only gonna be able
Speaker 1: to add a couple percent to the workforce doing that,
Speaker 1: and it's not going to help the rest of the economy.
Speaker 1: And it just further ignores frankly, women and people of color,
Speaker 1: who are predominantly in slow wage services jobs among the
Speaker 1: and whereas the old manufacturing sector part of the nostalgias,
Speaker 1: it's overwhelmingly white man. And so this just further reinforces
Speaker 1: the sense of frustration and privilege. And the other point
Speaker 1: just to make is that it's not gonna work. I mean,
Speaker 1: there are people who think you do this, you you
Speaker 1: fixate on manufacturing because you'll buy off the fascist But
Speaker 1: it's not going to buy them off, because all it's
Speaker 1: gonna do is reinforce their sense of special status. So
Speaker 1: I'm urging the Biden administration and people to get past
Speaker 1: the nostalgia and worry about bringing up jobs for everybody.
Speaker 1: And I pulled anice adem. We appreciate your time so
Speaker 1: as always and pay us in. Institute President Simona Macuda
Speaker 1: was State Street their senior economist with a really really
Speaker 1: smart no doubt unlinking fiscal and monetary into our inflation worry, Simona,
Speaker 1: which is more important for this fear of runaway inflation
Speaker 1: the fiscal story of the monetary story. Well, first of all,
Speaker 1: I think none of them are particularly impactful in the
Speaker 1: very near term. Everything that we are seeing today has
Speaker 1: to do with what we're talking about just now, reopening
Speaker 1: base effect all of that. I think where the policy
Speaker 1: framework and the combination and monetary and fiscal shift in
Speaker 1: the way we we set policy talks more about inflation
Speaker 1: over the medium term. And it's hard to tell really
Speaker 1: which one is more important than the other because there
Speaker 1: are many facets to the fiscal side. But I think
Speaker 1: we come back to monetary and monetary policy almost has
Speaker 1: this role of guiding, you know, to what extent fiscal
Speaker 1: spending or fiscal expansion is allowed to help the economy
Speaker 1: run hot before monetary sort of putting the brakes to it.
Speaker 1: I think at the moment you have a combination where
Speaker 1: on both sides the intent is to really allow for
Speaker 1: more frequent and more prolonged episodes of the economy running hot.
Speaker 1: On both sides of policy. Let's go, oh yeah, let me,
Speaker 1: let's let's talk. Let's talk from macro to the grocery store,
Speaker 1: because there's a question of what prices were looking at
Speaker 1: a sort of the red herring to signal that perhaps
Speaker 1: there is a longer lasting inflationary push. Are their particular goods,
Speaker 1: particular services that you view as harbingers perhaps greater inflation
Speaker 1: to come. So I look at visible prices what I consider,
Speaker 1: you know, things that the average person would pay attention to.
Speaker 1: And there are two in particular, energy prices gasoline and
Speaker 1: food prices that I think are more visible to the
Speaker 1: average person. And why are they important? They are important
Speaker 1: because they speak to how you form inflation expectations. Right,
Speaker 1: So we as economies, we understand the different between core
Speaker 1: inflation and headline inflation. But you know, really, what are
Speaker 1: you experiencing your real life? You do not experience core inflation,
Speaker 1: right You You experience the life as a whole and
Speaker 1: inflation as a whole. For policy making purposes, core inflation
Speaker 1: is very important for the average person. It's headline that
Speaker 1: helps that inflation expectation. So I think it's it's it's
Speaker 1: we should not dismiss put the inflation as as an
Speaker 1: element in shaping inflation expectations. But again one point that
Speaker 1: would make from a policy standpoint, and you're looking not
Speaker 1: just at the peaks, right, You're looking at the sustainability
Speaker 1: of this trend. Remember, we were at two and a
Speaker 1: half percent inflation in you know, just a couple of
Speaker 1: years ago. We were close to three percent, uh four
Speaker 1: percent even in two thousand eleven. It didn't last. So
Speaker 1: really the question that we all are watching for, and
Speaker 1: that's why I say the one inflation is important. I
Speaker 1: think for market is two inflation. That's more important. Still
Speaker 1: because if we'll talk about the sustainabilly, something the vice
Speaker 1: chairman of the Fellows Average Climate had talked about recently
Speaker 1: as well. Simonta, great to catch up, Thank you very much.
Speaker 1: Samonti will cut to that, the State Street Senior economist.
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