Biden Economist Jared Bernstein Tells Dean Obeidallah President’s Spending Plan Will ‘Put Downward Pressure On Inflation’
Biden administration economist Jared Bernstein told SiriusXM host Dean Obeidallah that the infrastructure bill and President Joe Biden’s Build Back Better plan will help fight inflation.
On Friday’s edition of The Dean Obeidallah Show, the host talked with Bernstein about the inflation that has roiled consumers and become the focus of intense media attention, and what effect the president’s plans will have on it:
Dean: Can you explain a little so people understand what is driving the inflation we are seeing right now?!
Jared: I will the first point I want to make though is that just in the way you teed it up the President has been very clear on this point he’s calling this a “top priority” and he knows first hand how even a small increase–he’s very sensitive to family budgets this is something he talked about a lot.
There is a near term and a medium-term approach to this. The near term gets to your question which is: what is behind these elevated price pressures we’re facing? Well one of the things is that when we hit the pandemic. as I mentioned a second ago, people stopped engaging in-person services: restaurants, concerts, travelling, even health services people really pulled back. That means that their savings rates went up, they had some excess savings and we also very importantly help with relief for especially middle and lower income people to get to the other side of the crisis. What they did with those resources, they bought more than usual the amount of goods, so manufacturing goods demand went way up relative to its previous trend and services demand went way down.
Now while those manufacturing goods were demanded you have Covid upon the land, and supply chains were starting to get snarled up. And so you have this interaction between this shift in the relative demand for goods over services and the problems that the virus was playing in our logistical supply chains.
When it comes to [Biden’s] Building Back Better [bill] and when it comes to the infrastructure plan, these are measures–and this is not as well understood that it needs to be–that it will put downward pressure on inflation. That’s not just me talking, you have economists like Larry Summers saying this. Mark Zandi from Moody’s Analytics saying this, we have 17 Nobel laureates signing a letter that says, and I’m going to quote here, that these bills that will enhance the ability of more Americans to participate productively in the economy, it will ease longer term inflationary pressure. So these plans, according to a wide swathe of economists we’ve talked to–even those who have been critical of the inflation scenarios– say that these plans will ease longer term inflationary pressures, not boost them.
Watch above via SiriusXM.
