WEBVTT - Lael Brainard on What Still Can Be Done to Lower Prices 0:00:10.119 --> 0:00:13.880 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:13.960 --> 0:00:16.760 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:16.600 --> 0:00:20.239 Tracy New Year. I think, so far in twenty twenty four, 0:00:20.320 --> 0:00:23.800 I do not feel any more clear or confident that 0:00:23.840 --> 0:00:26.640 I have some real deep sense of which way this 0:00:26.720 --> 0:00:27.840 economy has gone. 0:00:29.280 --> 0:00:29.360 Uh. 0:00:29.520 --> 0:00:31.680 It feels like there's a risk that everyone could be 0:00:31.720 --> 0:00:34.600 wrong just going in the other direction this time around. 0:00:34.640 --> 0:00:37.880 So as we've discussed multiple times, at this point, feels 0:00:37.960 --> 0:00:40.959 like there's a lot more acceptance for the idea of 0:00:41.120 --> 0:00:44.000 a soft landing or the idea that inflation can come 0:00:44.040 --> 0:00:47.840 down without generating a big spike in unemployment. 0:00:48.080 --> 0:00:50.360 No, there's no question at the end of last year 0:00:50.560 --> 0:00:54.240 like soft landing, optimism really picked up. But you could 0:00:54.280 --> 0:00:56.360 like tell me any story right now, and I would 0:00:56.400 --> 0:01:00.560 believe you could say, oh, financial conditions are easy quite 0:01:00.560 --> 0:01:03.280 a bit. Stock markets at all time high or close 0:01:03.320 --> 0:01:06.800 to all time high. Rates are falling, the labor market 0:01:06.880 --> 0:01:09.839 is tight. Wage growth just came in higher than expectation. 0:01:10.120 --> 0:01:12.920 There's still upward risk of inflation. You could tell me, oh, 0:01:13.200 --> 0:01:16.120 u six, and various measures of the labor market actually 0:01:16.160 --> 0:01:20.600 weakened last month. Maybe the economy is not as on 0:01:20.760 --> 0:01:23.200 solid footing as we thought or two months ago. Like 0:01:23.640 --> 0:01:26.560 any story, this is, I might believe you. 0:01:27.319 --> 0:01:29.880 This is a symptom of being online too much and 0:01:30.840 --> 0:01:32.559 talking to people online too much. 0:01:32.800 --> 0:01:33.200 That's it. 0:01:33.520 --> 0:01:35.959 Yeah, and just being able to argue both sides of 0:01:35.959 --> 0:01:38.480 the story because you see it constantly. But I mean, 0:01:38.520 --> 0:01:41.319 I take the point like, there there is a lot 0:01:41.360 --> 0:01:44.040 more optimism out there right now than there was a 0:01:44.160 --> 0:01:46.320 year ago. But on the other hand, there is still 0:01:46.360 --> 0:01:51.000 this I guess lingering sense of unease or even angst 0:01:51.080 --> 0:01:53.800 that you see in some of the consumer measurements. Or 0:01:53.840 --> 0:01:56.120 again to your point online, if you point out the 0:01:56.200 --> 0:01:58.800 jobs market is doing really great, you will have a 0:01:58.840 --> 0:02:02.840 bunch of people talking revisions to payrolls and things like that. 0:02:03.040 --> 0:02:05.600 Yeah, and it's legitimate, like some of the measures have 0:02:05.840 --> 0:02:09.640 gone down. So you know, I genuinely I find myself 0:02:09.880 --> 0:02:12.120 and plus the crowd is you know, gets it wrong 0:02:12.160 --> 0:02:14.640 a lot, So it seems like we're at tempting fate 0:02:14.720 --> 0:02:17.920 by believing too much in the soft landing story. But 0:02:17.919 --> 0:02:19.720 it really does feel to me, like, you know, there 0:02:19.760 --> 0:02:23.000 are many moving parts to this economy. You mentioned some 0:02:23.040 --> 0:02:25.440 of the sentiment measures, but there's also the fact that 0:02:25.800 --> 0:02:30.640 even with the inflation improvement, housing is still incredibly expensive, 0:02:30.639 --> 0:02:33.360 and there's all kinds of frustrations around that. So I 0:02:33.400 --> 0:02:35.440 don't think we will ever reach the end where we 0:02:35.440 --> 0:02:37.720 could say, Okay, we know what's going on in the 0:02:37.720 --> 0:02:39.480 economy right now. We're always just going to sort of 0:02:39.480 --> 0:02:41.480 be searching for more threads to follow. 0:02:41.960 --> 0:02:44.520 The soft landing is a journey, not a destination. 0:02:44.760 --> 0:02:45.160 Joe. 0:02:46.080 --> 0:02:48.480 Well, on that note, I really think we do have 0:02:48.840 --> 0:02:51.680 the perfect guests to start the year to discuss the 0:02:51.680 --> 0:02:55.320 state of the economy, where it's going, what policy levers 0:02:55.400 --> 0:02:57.560 might yet to be pulled as we go through twenty 0:02:57.600 --> 0:03:00.680 twenty four. I'm thrilled to welcome her first time coming 0:03:00.680 --> 0:03:04.160 on to the Odd Lots podcast. Lalol Brainerd, Director of 0:03:04.200 --> 0:03:07.600 the National Economic Council, Lalo Brainerd, thank you so much 0:03:07.680 --> 0:03:11.160 for coming on Odd Lots. Really appreciate you joining us. 0:03:11.360 --> 0:03:13.720 Why did we just get started? So on Friday we 0:03:13.800 --> 0:03:17.520 had the latest December non farm payrolls report. Headline looked 0:03:17.520 --> 0:03:22.480 pretty solid, unemployment, wages, job creation better than expected, but 0:03:22.600 --> 0:03:25.840 we did see some weakening in measures like labor force 0:03:25.919 --> 0:03:30.960 participation rate, prime age, employment to population U six measures 0:03:30.960 --> 0:03:34.600 of underemployment. Is there anything that concerns you right now 0:03:34.720 --> 0:03:37.200 about the momentum of the labor market as we head 0:03:37.200 --> 0:03:38.160 into twenty twenty four. 0:03:38.560 --> 0:03:40.960 Well, I have to say, taking a step back, sure 0:03:41.000 --> 0:03:45.080 that the labor market looks really strong if you think 0:03:45.120 --> 0:03:49.640 about it. It started twenty twenty three with unemployment already 0:03:50.120 --> 0:03:53.280 below four percent, and it maintained that. In fact, it's 0:03:53.320 --> 0:03:56.480 been below four percent now for just about two years, 0:03:56.480 --> 0:03:59.720 which I think is we haven't seen that for fifty years. 0:03:59.800 --> 0:04:03.600 And even despite the fact that we started the year 0:04:03.760 --> 0:04:07.200 from a position of low unemployment, the economy created an 0:04:07.280 --> 0:04:12.360 additional two point seven million jobs, which is really a record. 0:04:12.920 --> 0:04:16.800 And in terms of thinking about the economy going forward, 0:04:18.000 --> 0:04:23.520 the growth of the economy's been quite good. Productivity has 0:04:23.560 --> 0:04:27.120 been up, and inflation has actually come down during this 0:04:27.279 --> 0:04:30.640 time of strong employment growth, So that also looks like 0:04:30.680 --> 0:04:32.120 a pretty healthy economy. 0:04:32.400 --> 0:04:34.680 So I take the point about the health of the 0:04:35.000 --> 0:04:37.160 jobs market at the moment, but I can tell you 0:04:37.240 --> 0:04:41.360 from personal experience that if you tweet the payrolls figure 0:04:41.560 --> 0:04:45.239 came in strong or higher than expected, you do get 0:04:45.360 --> 0:04:48.200 a bunch of people on the internet who are pointing 0:04:48.240 --> 0:04:51.320 to things like downward revisions, or the shift from full 0:04:51.360 --> 0:04:54.160 time to part time jobs, or the number of people 0:04:54.360 --> 0:04:57.760 now who have to hold multiple jobs. How are you 0:04:57.839 --> 0:05:01.920 thinking about I guess the quality of jobs as well 0:05:01.960 --> 0:05:03.160 as the headline figure. 0:05:04.200 --> 0:05:10.320 Look, I think the overall statistics are very strong in 0:05:10.440 --> 0:05:13.200 terms of the quality of jobs as well. We've had 0:05:13.440 --> 0:05:20.960 wage growth that is exceeding inflation now not just relative 0:05:21.000 --> 0:05:24.960 to when the President took office, but also relative to 0:05:25.360 --> 0:05:29.880 the strongest pre pandemic year. So wages are up by 0:05:29.920 --> 0:05:34.080 an amount that means most households can spend, you know, 0:05:34.400 --> 0:05:37.919 thirty five hundred dollars of extra spending after buying the 0:05:37.960 --> 0:05:42.000 same things they would have purchased a pre pandemic. Wealth 0:05:42.080 --> 0:05:45.880 is also up, and the fact that so many Americans 0:05:45.920 --> 0:05:51.320 are employed, that the employment of population ratio for working 0:05:51.360 --> 0:05:56.920 age Americans is very high, higher than pre pandemic means 0:05:56.960 --> 0:06:01.520 that those people are going to continue earning and continue 0:06:02.040 --> 0:06:06.280 being able to spend and to power the economy going forward. 0:06:06.320 --> 0:06:09.320 So while I think we are seeing slowing growth, which 0:06:09.320 --> 0:06:13.800 would make sense at this point in a very strong recovery, Nonetheless, 0:06:14.000 --> 0:06:18.920 the wages, the record union contracts that we have seen 0:06:19.120 --> 0:06:22.760 over the last year vote really well for the ability 0:06:22.880 --> 0:06:27.000 of households to continue spending and to continue fueling the economy. 0:06:27.440 --> 0:06:30.440 Do you have an explanation for why the labor market 0:06:30.520 --> 0:06:33.719 has held up as well as it has given a 0:06:33.800 --> 0:06:36.839 sort of historic interest rate shock over the last eighteen 0:06:36.920 --> 0:06:37.880 twenty four months. 0:06:38.240 --> 0:06:42.240 Well, look, I think it is remarkable actually, just how 0:06:42.320 --> 0:06:46.400 much this president has navigated through if you think about it, 0:06:46.560 --> 0:06:51.440 the pandemic, which scrambled supply chains and led to a 0:06:51.640 --> 0:06:55.599 historic number of people out of the labor force. And 0:06:55.720 --> 0:06:58.279 then just on top of that, we got this massive 0:06:58.400 --> 0:07:03.960 oil price shock by rush invasion of Ukraine, and just 0:07:04.000 --> 0:07:08.160 a year ago, don't forget, we navigated a regional banking crisis, 0:07:08.480 --> 0:07:13.280 all while interest rates were rising. But if you look 0:07:13.440 --> 0:07:16.840 at the strength of the labor market, the growth that 0:07:16.880 --> 0:07:19.640 we've seen over the course of the last year, well 0:07:19.720 --> 0:07:23.360 above trend, and if you look at inflation, which we 0:07:23.400 --> 0:07:26.320 saw coming back down to two percent in terms of 0:07:26.360 --> 0:07:30.720 that core measure over the last six months, it's been 0:07:31.080 --> 0:07:36.160 a strong record, and I think it reflects the president's 0:07:36.320 --> 0:07:41.200 own views that this was not a normal kind of recovery, 0:07:41.320 --> 0:07:46.160 and he focused on two things, one on making sure 0:07:46.240 --> 0:07:50.280 that as many Americans were able to stay in their homes, 0:07:50.720 --> 0:07:55.640 come back into the labor force, quickly maintain their household 0:07:55.680 --> 0:07:59.520 balance sheets. So you had a much more equitable recovery, 0:07:59.640 --> 0:08:03.600 and it was also a much stronger recovery that attracted 0:08:03.640 --> 0:08:07.120 a lot of Americans back into the labor force. So 0:08:07.160 --> 0:08:10.200 instead of seeing the great resignation, we've seen the great 0:08:10.320 --> 0:08:13.560 rebound in terms of the workforce. And then the second thing, 0:08:13.880 --> 0:08:16.480 he put a tremendous amount of focus on the supply 0:08:16.680 --> 0:08:19.680 side of They found the economy which was really the 0:08:19.800 --> 0:08:22.480 source of a lot of the distortions. And he's got 0:08:22.520 --> 0:08:26.480 a agenda of investing in America and investing in Americans 0:08:27.120 --> 0:08:32.560 that has an ongoing focus on more R and D spending, 0:08:33.280 --> 0:08:39.760 more spending on clean energy transition, fixing infrastructure that really 0:08:39.880 --> 0:08:44.640 needed to be fixed, and of course investing in industries 0:08:44.679 --> 0:08:47.720 of the future like semiconductors. So you know, we've got 0:08:47.720 --> 0:08:51.640 that strong investing in America agenda along with a strong 0:08:52.280 --> 0:08:56.360 recovery attracting people back into the labor force into these 0:08:56.400 --> 0:08:57.720 good jobs of the future. 0:08:58.800 --> 0:09:01.240 So Joe and I definitely want to get into more 0:09:01.280 --> 0:09:04.160 of the supply side in just a bit, but before 0:09:04.200 --> 0:09:07.079 we do, given everything that you just slaid, out, So 0:09:07.360 --> 0:09:10.120 the economic recovery, which was stronger than a lot of 0:09:10.120 --> 0:09:14.280 people expected, the still very strong and buoyant jobs market, 0:09:14.640 --> 0:09:17.840 the improvement in wages, where you know, on an inflation 0:09:17.920 --> 0:09:22.120 adjusted basis, we have seen those going up. Why do 0:09:22.200 --> 0:09:27.040 you think in surveys people are still showing some sort 0:09:27.559 --> 0:09:29.840 of angst. You know, we've seen this repeatedly, and you 0:09:29.840 --> 0:09:32.640 can call it whatever you want, the vibe session or 0:09:32.640 --> 0:09:36.560 something else, But why aren't those messages filtering through? 0:09:37.679 --> 0:09:39.520 Yeah, so it's a good question. I mean, if you 0:09:39.600 --> 0:09:45.320 do look at both household incomes adjusted for inflation, really 0:09:45.400 --> 0:09:50.120 strong improvement since before the pandemic. And secondly, if you 0:09:50.200 --> 0:09:53.240 look at wealth media and household wealth is up by 0:09:53.320 --> 0:09:58.560 thirty seven percent inflation adjusted since before the pandemic, so 0:09:58.600 --> 0:10:03.120 the best year of the previous administration. So in terms 0:10:03.120 --> 0:10:08.560 of personal finances, you do actually see Americans reporting with 0:10:08.640 --> 0:10:12.280 a large majority that they are doing okay financially and 0:10:12.960 --> 0:10:17.040 job satisfaction is quite high. But it's been a very 0:10:17.080 --> 0:10:20.600 stressful few years for Americans if you think about the 0:10:20.679 --> 0:10:24.000 number of layoffs, the number of small businesses that shuttered, 0:10:24.559 --> 0:10:27.040 and then the surge of inflation that was on the 0:10:27.120 --> 0:10:29.960 supply side, and it may take a little bit of 0:10:30.160 --> 0:10:36.400 time for Americans to really feel confident that the good 0:10:36.559 --> 0:10:40.320 economic numbers that they're seeing and their own good personal 0:10:40.360 --> 0:10:46.120 situations is actually going to be sustained. And part of 0:10:46.160 --> 0:10:49.760 that is some prices have not come down, and we're 0:10:49.800 --> 0:10:53.720 fighting pretty hard to get those prices to come down. 0:10:53.880 --> 0:10:59.720 One area that really is difficult for Americans is healthcare affordability. 0:10:59.760 --> 0:11:03.000 And though you've had a huge set of really important 0:11:03.040 --> 0:11:07.000 initiatives that the President has been focused on. For instance, 0:11:07.280 --> 0:11:11.280 in the legislation that was passed about a year ago, 0:11:11.880 --> 0:11:16.079 it actually brings down the cost of insulin for the 0:11:16.120 --> 0:11:19.200 first time from four hundred dollars a month to thirty 0:11:19.240 --> 0:11:22.280 five dollars a month for seniors, and some companies have 0:11:22.360 --> 0:11:25.920 extended that more broadly, and it caps the yearly out 0:11:25.960 --> 0:11:30.000 of pocket costs for seniors for prescription drugs at two 0:11:30.040 --> 0:11:33.480 thousand dollars, So that will start to make a dent there. 0:11:33.520 --> 0:11:37.960 But we're going to continue pushing on healthcare costs as 0:11:38.000 --> 0:11:42.560 well as other areas which are really more about deceptive 0:11:42.640 --> 0:11:47.120 pricing where Americans feel like they're just spending more than 0:11:47.160 --> 0:11:47.640 they should. 0:12:04.520 --> 0:12:08.439 So one area of disinflation or supply side improvement that's 0:12:08.559 --> 0:12:11.880 very clear has been on oil and gasoline prices. And 0:12:11.920 --> 0:12:14.120 you mentioned the oil shock a couple of years ago 0:12:14.559 --> 0:12:16.120 or a year and a half ago, but it's obviously 0:12:16.160 --> 0:12:20.320 come down quite a bit. Meanwhile, US oil production, domestic 0:12:20.360 --> 0:12:23.280 production of oil is at all time highs. Is that 0:12:23.360 --> 0:12:26.560 something that the White House is proud of and is 0:12:26.640 --> 0:12:29.560 that something that further aims Does the White House aim 0:12:29.600 --> 0:12:32.720 to see further expansion of domestic oil production in order 0:12:32.840 --> 0:12:34.760 to push gasoline prices lower? 0:12:35.040 --> 0:12:40.240 Well, gas prices are so important for weekly budgets and 0:12:40.679 --> 0:12:45.040 the kind of kitchen table economics focus of this administration 0:12:45.160 --> 0:12:49.280 is very much trying to make sure that people have 0:12:49.640 --> 0:12:52.240 a little breathing room at the end of each month 0:12:52.280 --> 0:12:56.880 after paying their bills. So that reduction in gas prices 0:12:56.920 --> 0:13:01.240 at the pump from to about two I want to say, 0:13:01.240 --> 0:13:05.320 it's just a touch below three dollars median price that 0:13:05.360 --> 0:13:08.360 Americans are seeing around the country, and in a lot 0:13:08.400 --> 0:13:11.000 of states they're seeing lower prices than that. That is 0:13:11.040 --> 0:13:15.160 a very meaningful amount of relief. It's about a dollar 0:13:15.360 --> 0:13:18.720 ninety down from what we saw a year ago. And 0:13:18.840 --> 0:13:23.439 of course we're also seeing some grocery store prices coming down. 0:13:23.800 --> 0:13:27.280 But in terms of your question, the President also has 0:13:27.520 --> 0:13:33.720 a huge clean energy transition investment agenda. He got historic 0:13:34.000 --> 0:13:37.880 legislation there. We have tax credits that are leading to 0:13:38.440 --> 0:13:45.360 a real boom in manufacturing of clean energy, clean vehicles. 0:13:45.760 --> 0:13:48.480 So these two things are going on at the same time, 0:13:48.960 --> 0:13:52.959 and that bodes very well for the longer term transition 0:13:53.080 --> 0:13:56.800 to a clean energy future that America is in the 0:13:56.840 --> 0:13:59.679 process of making. And I would say those tax credits 0:14:00.000 --> 0:14:05.000 tremendous excitement. They are huge numbers of private sector investments 0:14:05.120 --> 0:14:11.600 that are being catalyzed by those government inflation reduction at 0:14:11.600 --> 0:14:12.880 clean energy incentives. 0:14:14.120 --> 0:14:17.319 Since you mentioned grocery prices, one thing we've been talking 0:14:17.400 --> 0:14:20.560 quite a bit on this podcast about is excuse flation, 0:14:20.960 --> 0:14:24.920 or the idea that companies have taken advantage of supply 0:14:25.000 --> 0:14:28.000 chain disruptions to raise their prices all at once, and 0:14:28.400 --> 0:14:31.560 other people call it different things, you know, profit led 0:14:31.560 --> 0:14:36.560 inflation or seller's inflation. Biden recently referred to it as 0:14:36.760 --> 0:14:42.240 price gouging. But I'm curious what evidence you see from 0:14:42.280 --> 0:14:47.120 your perch of companies sort of opportunistically raising prices. And 0:14:47.160 --> 0:14:51.400 then secondly, what tools does the Biden administration actually have 0:14:51.640 --> 0:14:56.200 to target prices that are ultimately being set by private enterprises. 0:14:57.080 --> 0:15:00.320 Yeah, so we have seen and you can see it 0:15:00.400 --> 0:15:05.680 in the data that when supply chains were snarled and 0:15:05.880 --> 0:15:10.560 input prices were going up, that a lot of big 0:15:10.640 --> 0:15:16.000 corporations raised their prices to consumers by as much or more, 0:15:16.040 --> 0:15:19.440 which meant that their markups went up, which some people 0:15:19.480 --> 0:15:23.240 have referred to as a price price spiral. And the 0:15:23.280 --> 0:15:27.120 President has been very focused on this because if you 0:15:27.280 --> 0:15:33.360 look at supply chain measures, they look like a very 0:15:33.440 --> 0:15:39.200 sharp spike upward to a level of supply chain disruptions 0:15:39.280 --> 0:15:43.480 that we really don't see in the data prior to 0:15:44.040 --> 0:15:49.320 twenty twenty two, and then they come down extremely sharply 0:15:49.560 --> 0:15:52.160 over the course of twenty twenty three, so that they 0:15:52.200 --> 0:15:57.000 are now back down to levels that we saw pre pandemic. 0:15:57.160 --> 0:16:02.600 And input costs also have come down. So what is 0:16:03.120 --> 0:16:08.400 really troubling is that corporations need to pass those input 0:16:09.080 --> 0:16:15.280 cost declines on to consumers and so that consumers can 0:16:15.320 --> 0:16:19.840 see the benefit of that in their weekly budgets. And 0:16:19.880 --> 0:16:23.400 the President has been very clear about how important that is. 0:16:23.920 --> 0:16:27.320 We've done a lot of work to fix those supply chains. 0:16:27.400 --> 0:16:33.160 Now corporations need to make those input cost reductions available 0:16:33.200 --> 0:16:36.480 to consumers in terms of their final price. And we're 0:16:36.560 --> 0:16:41.200 also taking action where we have enforcement tools on deceptive 0:16:41.320 --> 0:16:45.520 or unfair pricing. And so you've seen actions in areas 0:16:45.720 --> 0:16:50.800 like airlines on family seating fees or extra baggage fees. 0:16:51.320 --> 0:16:56.400 We've seen actions that the administration has taken on overdraft 0:16:56.480 --> 0:17:03.360 fees and bounce check fees, and will continue to push 0:17:03.520 --> 0:17:08.399 really hard and take action where necessary in the areas 0:17:08.800 --> 0:17:13.399 like ticketing fees, other areas where American consumers are just 0:17:13.480 --> 0:17:16.160 kind of fed up with seeing these extra charges. 0:17:17.240 --> 0:17:21.160 How do you encourage companies to pass on those price 0:17:21.240 --> 0:17:25.600 declines to consumers? Because I'm just thinking in other parts 0:17:25.640 --> 0:17:27.760 of the world, I mean, notably Europe, there's been talk 0:17:27.800 --> 0:17:31.919 of stuff like or some action on price controls, but 0:17:32.560 --> 0:17:35.639 that seems like a sort of political non starter in 0:17:35.680 --> 0:17:38.399 the US. So what exactly can you ask companies to 0:17:38.440 --> 0:17:39.240 do on this front. 0:17:39.920 --> 0:17:43.840 Yeah, that really hasn't been the approach that this administration 0:17:43.920 --> 0:17:46.560 has taken at all. It has been to use the 0:17:46.600 --> 0:17:52.439 authorities we have at our regulatory agencies to go after 0:17:52.880 --> 0:17:57.639 fees that are deceptive, fees that are not transparent, fees 0:17:58.040 --> 0:18:03.240 on ticketing or fees on hotels. You know, we've had 0:18:03.240 --> 0:18:09.800 the President meet with people who for instance, Becky Chong 0:18:10.000 --> 0:18:13.639 from Oregon, you know, came to a junk fees event 0:18:13.720 --> 0:18:16.480 at the White House and she talked about how she 0:18:16.560 --> 0:18:19.800 and her husband took her two daughters to see their 0:18:19.840 --> 0:18:24.720 grandparents last summer and they were surprised to see unexpected 0:18:24.800 --> 0:18:27.919 junk fees on their hotel bill that totaled over one 0:18:28.000 --> 0:18:34.160 hundred dollars. So partly by just making these practices very 0:18:34.200 --> 0:18:39.480 transparent and then taking enforcement actions and creating rules about 0:18:39.560 --> 0:18:43.439 transparency of those prices, we are starting to see some 0:18:43.600 --> 0:18:47.200 real progress, but it's not enough. And in the area 0:18:47.200 --> 0:18:51.560 of healthcare in particular, we have legislative tools to enable 0:18:51.680 --> 0:18:56.680 drug prices for the first time to be negotiated with Medicare, 0:18:56.720 --> 0:18:58.720 and we expect that to make a big difference. 0:18:59.320 --> 0:19:01.200 I just want to go back again to the question 0:19:01.320 --> 0:19:05.120 of domestic energy, especially given the industrial policy efforts from 0:19:05.119 --> 0:19:10.040 the White House, chips, the Inflation Reduction Act, the infrastructure 0:19:10.040 --> 0:19:12.919 spending obviously is going to need a lot of energy 0:19:12.960 --> 0:19:16.800 to power up new factories, new facilities, and so forth. 0:19:17.160 --> 0:19:20.240 Does the White House want to see that domestic production 0:19:20.320 --> 0:19:22.800 of oil and gas continue to rise. I take it 0:19:22.840 --> 0:19:26.480 about the clean energy and the transition, but in terms 0:19:26.480 --> 0:19:29.400 of fossil fuels, does the White House want to see 0:19:29.440 --> 0:19:32.840 that line continue to rise? I feel like the last 0:19:32.880 --> 0:19:36.240 president and the perhaps rival would be out tweeting about 0:19:36.240 --> 0:19:37.000 that line a lot. 0:19:38.040 --> 0:19:45.480 The President has passed historic legislation to help this economy 0:19:46.240 --> 0:19:51.439 transition in the most resilient and dynamic way to a 0:19:51.480 --> 0:19:55.800 clean energy future. So that really has been a huge 0:19:55.840 --> 0:19:59.639 focus on his part to make sure that the US 0:19:59.720 --> 0:20:03.840 is a leader on technologies that are going to reduce 0:20:04.160 --> 0:20:10.360 emissions and a leader on clean energy and electric vehicle 0:20:10.560 --> 0:20:14.880 investments at the same time. During this transitional period, he's 0:20:14.920 --> 0:20:19.439 been very focused on making sure that American consumers have 0:20:19.760 --> 0:20:22.679 the ability to have a little extra money at the 0:20:22.800 --> 0:20:26.520 end of the month, and that has meant working really 0:20:26.560 --> 0:20:31.600 hard to get what we're very distorted high prices at 0:20:31.600 --> 0:20:35.440 the pump down very substantially, and that's what we're seeing. 0:20:35.440 --> 0:20:39.680 We're seeing gas prices at the pump below three dollars 0:20:39.760 --> 0:20:44.879 in most parts of America. So those two things are 0:20:45.040 --> 0:20:47.560 both important to the President, and I think we are 0:20:48.080 --> 0:20:49.760 seeing real progress on both. 0:20:51.000 --> 0:20:54.200 So in terms of things that Americans really care about. 0:20:54.280 --> 0:20:57.359 I mean, one of those has to be housing, and 0:20:57.400 --> 0:21:01.840 we have seen various metrics of housing affordability really decline 0:21:02.320 --> 0:21:03.360 in the past. 0:21:03.160 --> 0:21:04.080 Couple of years. 0:21:04.160 --> 0:21:08.320 And there is a broader concern that with interest rates still, 0:21:08.400 --> 0:21:11.160 you know, relatively high, that you are going to start 0:21:11.200 --> 0:21:14.679 to see capacity slow and there is I guess this 0:21:14.840 --> 0:21:19.719 tension between keeping rates high to bring down inflation and 0:21:19.880 --> 0:21:23.560 also encouraging more supply of housing so that ultimately that 0:21:23.600 --> 0:21:26.600 can be more affordable. What can the administration do when 0:21:26.600 --> 0:21:29.119 it comes to that particular tension. 0:21:29.920 --> 0:21:35.280 Yeah, so you're exactly right. Making housing more affordable is 0:21:36.080 --> 0:21:41.560 central to so many Americans, whether they be first time 0:21:42.160 --> 0:21:49.040 aspirational home buyers or whether that is people who are renting. 0:21:49.640 --> 0:21:55.880 Bringing down the costs of housing for Americans is really important. Now. 0:21:56.520 --> 0:21:59.320 The good news is we have actually seen mortgage rates 0:21:59.359 --> 0:22:02.720 come down about one and a half percentage point just 0:22:02.760 --> 0:22:05.879 in the last few months on the back of the 0:22:05.920 --> 0:22:08.760 really good inflation data that we've been seeing. So that's 0:22:09.240 --> 0:22:13.400 very encouraging. But the President also has a very forward 0:22:13.480 --> 0:22:18.960 leaning agenda there to ensure that there are many more 0:22:19.080 --> 0:22:25.240 affordable units. We have been supporting tax credits that would 0:22:25.359 --> 0:22:31.600 lead to about one point two million additional affordable homes 0:22:32.080 --> 0:22:36.320 and a second tax credit that would mean about five 0:22:36.400 --> 0:22:40.760 hundred thousand more affordable homes for first time home buyers. 0:22:40.920 --> 0:22:46.160 The President has proposed relief for first generation home buyers 0:22:46.200 --> 0:22:50.439 and renters to help lower costs, and I think we 0:22:50.840 --> 0:22:54.520 really are going to be pushing hard on Congress to 0:22:54.880 --> 0:23:00.960 get those policies done. Congress, the Republican House in particular, 0:23:01.080 --> 0:23:05.600 has not supported a lot of improvements on affordable housing, 0:23:05.640 --> 0:23:09.720 but we're going to continue working really hard. And additionally, 0:23:09.960 --> 0:23:14.760 we're trying to incentivize changes in local zoning policies in 0:23:14.800 --> 0:23:19.840 a lot of cases near transit hubs. By providing incentives 0:23:19.920 --> 0:23:26.000 with transit dollars, we're getting localities to unlock areas for 0:23:26.359 --> 0:23:28.760 more dense housing, and we think that'll make a really 0:23:28.800 --> 0:23:31.800 big difference over time as well. In the final thing 0:23:31.880 --> 0:23:35.720 I'd just say is that with office vacancy rates being 0:23:35.760 --> 0:23:39.120 a bit higher in some downtown areas, we've also got 0:23:39.160 --> 0:23:59.120 some programs to encourage office to residential conversions of downtown areas. 0:24:01.720 --> 0:24:05.440 You mentioned zoning, particularly the constraints around housing near transit. 0:24:05.520 --> 0:24:08.520 It's sort of something that I've been thinking about a 0:24:08.520 --> 0:24:10.159 lot of people are talking about you know, there was 0:24:10.200 --> 0:24:13.560 a CNN report that the White House was frustrated by 0:24:13.560 --> 0:24:16.399 the lack of tangible things the President can point to 0:24:16.560 --> 0:24:19.360 on the campaign trail that said, you know, we built this, 0:24:19.520 --> 0:24:23.320 or the clear evidence of these bills turning into physical things. 0:24:23.320 --> 0:24:25.440 And I'm not going to ask you to comment on 0:24:25.640 --> 0:24:29.159 press reports, but I am curious if you think that 0:24:29.600 --> 0:24:32.760 this is a tension between the Industrial Policy Act, Inflation 0:24:32.880 --> 0:24:36.679 Reduction Act CHIPS policies designed to get more factories on 0:24:36.720 --> 0:24:39.320 the ground, and whether there's still things that need to 0:24:39.359 --> 0:24:42.240 be done on the local side to make it easier 0:24:42.480 --> 0:24:44.560 to break ground on new construction. 0:24:45.040 --> 0:24:48.400 So two separate really important points that you're making. One 0:24:49.160 --> 0:24:54.560 is we do need localities to create changes in zoning, 0:24:55.200 --> 0:24:59.320 and so we have a pro housing grant program, which 0:24:59.359 --> 0:25:03.320 is first of its kind, that provides those kinds of 0:25:03.359 --> 0:25:08.399 incentives to help those communities that do remove barriers to 0:25:08.520 --> 0:25:13.040 housing production so that they get support for that. And 0:25:13.119 --> 0:25:16.000 we have a similar kind of program using Department of 0:25:16.040 --> 0:25:22.560 Transportation transit funding. On the side of clean energy and 0:25:22.960 --> 0:25:27.760 ships investments and infrastructure investments there too, a lot of 0:25:27.800 --> 0:25:33.159 attention has been given to permitting to accelerate the ability 0:25:33.200 --> 0:25:37.240 to make those investments by having a much more streamlined 0:25:37.280 --> 0:25:40.720 review at the federal level that brings together all the 0:25:40.800 --> 0:25:45.600 agencies in a streamlined process rather than going through what 0:25:45.920 --> 0:25:50.600 in previous administrations was kind of a laborious agency by 0:25:50.720 --> 0:25:54.600 agency review that in many cases took very many years. 0:25:54.680 --> 0:25:58.960 So we are looking for kind of game changing mechanisms 0:25:59.040 --> 0:26:04.439 to make that permitting process easier while still respecting the 0:26:04.520 --> 0:26:08.119 really important equities of local stakeholders. 0:26:09.000 --> 0:26:13.440 So Janet Yellen, now Treasury Secretary, formerly at the Fed, 0:26:13.600 --> 0:26:17.600 of course very similar to your career history, felt comfortable 0:26:17.800 --> 0:26:22.160 enough with the economic data last week to basically declare 0:26:22.280 --> 0:26:25.680 that this looks a lot like a soft landing. After 0:26:25.920 --> 0:26:28.320 many years, or I should say, a couple years of 0:26:28.320 --> 0:26:31.119 worrying about the potential for a recession hard landing, it 0:26:31.240 --> 0:26:34.240 feels like we're on the right path. What are you 0:26:34.480 --> 0:26:38.600 and the Biden administration looking at in terms of benchmarking 0:26:38.760 --> 0:26:42.600 your success and how much left there is to do 0:26:42.920 --> 0:26:44.640 on things like inflation. 0:26:45.880 --> 0:26:51.040