Facing mixed economic signals and growing public criticism, top White House economic officials tied rising inflation to the lingering effects of the COVID-19 pandemic, emphasizing that the economy will stabilize if normalcy returns.
“There’s no doubt inflation is high right now. It’s affecting Americans’ pocketbooks. It’s affecting their outlook,” National Economic Advisor Brian Deese said during a Sunday NBC News interview.
“We have to finish the job on COVID. We have to return to a sense of economic normalcy by getting more workplaces COVID-free, getting more kids vaccinated, so more parents feel comfortable going to work,” he continued.
“I think it’s important to realize that the cause of this inflation is the pandemic,” Treasury Secretary Janet Yellen said during a CBS News interview on Sunday. “It shut down our economy. It boosted unemployment to almost 15%, and we’ve been opening up in fits and starts.”
Yellen predicted that if the pandemic is successfully contained, she expects prices to return to normal “sometime in the second half of next year.”
Inflation is a generalized increase in the price of goods across the economy. While the price of all goods have increased by 1.2% over the last month, a spike in energy and gas prices has shocked households. A shortage of semiconductors has led to a rise in the prices of used cars and electronic goods.
U.S. employment and average wages increased more than expected in October, but the labor force is down more than 3 million people from pre-pandemic levels. The unemployment rate stood at 4.6% last month; wages increased 1.5%, slightly ahead of the 1.2% average inflation for the same period.
On Wednesday, President Joe Biden acknowledged the challenge inflation is having on everyday Americans and promised to ease the burden facing working Americans.
“Everything from a gallon of gas to a loaf of bread costs more, and it’s worrisome,” Biden said during remarks at the Port of Baltimore. “Even though wages are going up, we still face challenges, and we have to tackle them. We have to tackle them head on.”
Pandemic pressures on supply chain
The administration has taken some steps to ease the knots in supply chains across the country, including negotiating with the ports of Los Angeles and Baltimore to operate 24/7.
“You know, right now, the American economy is moving more goods through the economy than we ever have. But that’s creating some challenges,” Deese said on ABC News. Deese cited the recent port deals and the Biden’s signing of a bipartisan infrastructure package on Monday, which the administration hopes will make the supply chain more resilient in the future.
Yet many of the challenges pressuring the supply chain are systemic and only made worse by the ongoing pandemic. The country lacks truck drivers needed to move high-demand goods across the country. Most of the supply chain is also privately owned, limiting the White House’s ability to unilaterally change logistics.
Some Republican lawmakers and conservative economic analysts have argued that Biden’s domestic agenda, which includes increased spending on infrastructure and social services, would increase inflation.
The White House has pushed back, arguing Democrats’ major spending bills would slow inflation and boost economic growth.
“What every serious economist that has looked at this proposal has said is that it will not add to long-term inflationary pressure,” Deese told ABC News.
Follow Matthew Brown online @mrbrownsir.