More On: Jared Bernstein
Not like Biden, the chief economist, Jared Bernstein, says that inflation is not 'transitory'
Jared Bernstein, the White House's chief economist, said that the Biden administration's use of the word 'transitory' to describe rising inflation gave Americans the wrong idea that price increases would be short-term.
On July, U.S. President Joe Biden on Monday said an increase in prices was temporary, but his administration understood that unchecked inflation over the longer term would pose a "real challenge" to the economy and would remain vigilant.
Monday, Bernstein said this while telling a skeptical group of White House reporters that the economy was in great shape. At the time, people were worried that a recession was coming soon.
The member of the Council of Economic Advisers said that regular people misunderstood the term last year when it was used by the Biden administration to talk about inflation, which kept going up and in June hit a new 41-year annual record of 9.1%.
In a speech at the beginning of the press secretary's daily briefing, he then used hard-to-understand economic terms to try to reassure reporters that a recession is not likely, or at least to make them think that.
Ashley Parker of the Washington Post asked Bernstein, “What made the White House realize that the [term ‘transitory’] was inaccurate and also politically problematic?”
“I think it has to do with the — I’m going to use an economic term, periodicity,” Bernstein said.
“The what?” Parker asked.
“See, this is why you do a better job than I do,” he said in an apparent attempt at self-deprecating humor. “I think it has to do with the ambiguity about the length of that word, is what it has to do with. I think it has to do with the ambiguity about the length of that word.
“Some people hear transitory and they’re gonna think weeks and months. Others hear transitory, particularly probably economists who are used to the broader ups and downs of cycles and think longer periods, and I think the lack of specificity about the cadence that was implied by that word, temporal cadence implied by that word, led to a level of ambiguity that wasn’t serving the debate very well.”
Parker followed up, “What about just in the second part, about politically problematic?”
“I think that when it comes to, you know, politically problematic, you’ve heard the president say in recent days that inflation is unacceptably high ad that bringing it down is the absolute number one domestic priority,” he said.
Reuters reporter Jeff Mason earlier pressed Bernstein on his rosy economic projections that the US economy isn’t lurching toward a recession as interest rates spike to tamp down inflation.
“I’m sure we all remember a year ago other colleagues of yours stood here and said inflation was ‘transitory’ and it was not going to last and that it certainly wasn’t going to go up to where we are now,” Mason said. “Do you think it’s possible that in a couple months you might regret standing here and saying we’re not about to be in a recession?”
“Well, I want to be very clear what I’m saying,” Bernstein hedged.
“What I’m saying is based consumer spending, based on payroll employment, based on where the unemployment rate is, I think we can confidently say that these these numbers that we’re posting are very much inconsistent with a recessionary call given where we are right now. I think that is the most accurate way to assess the answer to that question,” he said.
“When it comes to transitory I think the answer there is that we were careful when we were talking about that to consistently reference the forecasts that are out there, the view on inflation’s trajectory by not only pretty much every forecaster we could find, but of course the Federal Reserve as well,” Bernstein said at first, regarding the term.
“And so this was a period where we hadn’t seen a new variant of the virus, where the war in Ukraine of course was not yet a reality. So I think that if you look at look at the general trajectory of where the forecasts were pointing in there, that was generally the way in which we tried to talk about that. And I think that’s worth going back and seeing.”
The briefing at points grew contentious.
At one point, Newsmax reporter James Rosen belted at Bernstein, “Aren’t you having it both ways, when the gas prices go up, it’s got nothing to do with the president. When we see some decline, you want him to get the credit?”
“The president has reacted from the beginning talking about how this was such an important priority to alleviate these pressures on behalf of the American people,” Bernstein insisted.
Biden administration officials — including the president — have taken heat for inaccurately describing inflation as fleeting.
At a press briefing in August 2021, Jen Psaki, who was then the White House press secretary, said, "We rely on the Federal Reserve for projections. They project that prices will go back to normal next year, and this is still expected to be a temporary effect on prices."
In December, Biden said that November's inflation rate of 6.8% was likely the "peak." In July 2021, when inflation was around 5%, he said that it was "temporary."
In early February, before Russia invaded Ukraine, Biden called NBC anchor Lester Holt a "wise guy" for pointing out that Biden was wrong when he said that high inflation would only last for a short time. Instead, inflation went up even more.
“I think it was back in July, you said inflation was going to be temporary. I think a lot of Americans are wondering what your definition of temporary is,” Holt said.
“Well, you’re being a wise guy with me a little bit,” Biden said. “And I understand, that’s your job.”
Biden told Holt that COVID-19 supply chain bottlenecks helped drive inflation and singled out a shortage of semiconductors for cars — though the federal CPI tracked large jumps in a broad basket of goods and services.
“When can Americans expect some relief from this soaring inflation?” Holt asked.
The president said, “According to Nobel laureates, 14 on them that contacted me and a number of corporate leaders, it ought to be able to start to taper off as we go through this year.”
Although Biden generally rejects blame for inflation, in one instance in November he conceded that his $1.9 trillion American Rescue Plan Act, which passed without Republican support, likely had some effect on rising prices — a point that his Republican critics often make.
“The irony is people have more money now because of the first major piece of legislation I passed. You all got checks for $1,400. You got checks for a whole range of things,” Biden said, adding, “It changes people’s lives. But what happens if there’s nothing to buy and you got more money to compete for getting [goods]? It creates a real problem.”
A study released in late March by researchers at the Federal Reserve Bank of San Francisco said that in the final quarter of 2021, about 3 percentage points of US inflation — or roughly half of it at the time — may have been caused by government pandemic spending.
