Biden economic advisor: White House is doing ‘all we can’ to ease price pressures

White House Council of Economic Advisers member Jared Bernstein joins Yahoo Finance Live to weigh in on the latest inflation data, how the Biden administration is tackling the economic slowdown, the OPEC+ production cuts, and more.

Video Transcript

BRIAN SOZZI: All right, let's stay on the economy here. Inflation is still running hot, as we saw in today's Consumer Price Index. That comes as economic growth continues to be sluggish and recession calls pick up on Wall Street.

Let's dive into the economic outlook with Jared Bernstein, who is a member of the White House Council of Economic Advisors. Jared, always great to talk with you. I don't know if you heard, but we just had noted investor Cathie Wood on, calling for a potential economic shock because what we're seeing with inflation and the Fed. Would love to get your take on that.

JARED BERNSTEIN: Well, I think the underlying fundamentals, when it comes to, particularly, the labor market, remain very strong in this economy. And that's a really important tailwind when family budgets are challenged by these high price levels. So when you have an unemployment rate of 3 and 1/2%-- you're adding hundreds of thousands of jobs per month, 10 million jobs since this president got here-- that's going to help working families offset some of the pressures they're facing on the price side.

But it certainly doesn't get the job done, and we've got a lot more to do in that space. And that's why, at the direction of the president, we have focused like a laser on doing all we can to ease price pressures, on the supply side of the economy, when it comes to the ports, when it comes to shipping cost, airfreight cost, energy costs, and of course, the Inflation Reduction Act with its reduction in costs for medical care, for premiums, for prescription drugs, and also for clean energy.

So I think the question is, A, is there a strong labor market at your back? The answer is yes. B, is this administration doing everything we can to help ease those pressures? Also a firm yes on that one.

JULIE HYMAN: Jared, I want to pick up on the energy part of all of that, in particular. And listen, I know you're not a foreign policy guy, but obviously, what's been going on between the US and Saudi Arabia has been getting a lot of attention and the Saudi support of the OPEC production cut, which has been problematic for the global energy market. If we were looking for prices to continue their downward trajectory, what can the White House do and what is it doing domestically in terms of continuing to push for more production domestically?

JARED BERNSTEIN: Well, let's set the level here with just a little bit of a background on what's been going on in energy markets because I certainly agree with a lot of your characterization. But we got in the CPI report this morning, which is the motivation for our discussion, gas prices are actually down about 5% in September and at an annualized rate of almost 1/3, about 30%, in the third quarter. And of course, that reflects almost 100 days of decline in gas prices.

Now, to get to your question, and also to reference back what I was talking about in terms of what this White House can do to help, that reflects the very large distribution of 180 million barrels of oil from the Strategic Reserves. That's ongoing, to be clear. It's another 10 million barrels coming October, November. So that's an ongoing addition to global supply. But we have to do more, especially in the light of this misguided and, I think, a very wrong-headed decision by OPEC+.

I'm not going to talk about the geopolitics. That's not my lane. I will say, the president has consistently, since then, gone out and talked about the importance of sharing some of those wide profit margins with consumers to give them a bit more breathing room at the pump. If you look at the spread between the wholesale and the retail price, it's still quite elevated. But let's not forget that at the pump, the national price, about $3.90 a gallon, is down over $1 from its peak in June. We need to see more of that kind of breathing room for consumers. And that's one of the things we're going to keep pressing on.

BRAD SMITH: The reality is that individuals, households, they can't afford to stop spending on some of the necessities, whether that's food, whether that's energy prices, whether that's some of the rent prices, even, that we've been tracking. And so even with a longer and more protracted kind of an era of higher inflation, higher prices that people are paying, what do you believe from the White House side are some of the longer term implications of that that may also begin to show up on the backend?

JARED BERNSTEIN: So here's my answer to that. I think when you're thinking about that question, which looks around a corner, corners are very hard to look around right now. As you know, everybody's crystal ball is kind of cracked. Inflation is a global phenomenon. It's higher in many other countries than it is here. But I think the right thing to do is ask yourself, are the institutions most directly responsible for this challenge doing what they need to do?

The Federal Reserve-- absolutely yes, OK? Their pivot, their tightening campaign, I'm not going to get into the details because we stay out of their knitting, but they're very much engaged, as they should be. The president has endorsed that pivot. Are we doing everything we can? As I've tried to explain, yes, in the energy space, in the supply chain space, helping to snarl supply chains, Inflation Reduction Act, CHIPS Act, Infrastructure Act, helping to boost the economy supply side.

Are policymakers doing what they need to do? Is it taking effect? Well, if we dig into the inflation report today, we see goods inflation was actually flat in September. That's useful. But of course, housing inflation, shelter inflation, created more pressures. Well, is the Fed's action cooling the housing market? Unequivocal yes. It takes time for that lag to work its way into the CPI, but we're already seeing some cooling in the housing market, actually nontrivial, both on the rental side and the ownership side.

JULIE HYMAN: Jared, just very quickly here, we've been starting to hear not just from Cathie Wood, but other economists that inflation-- forward-looking inflation indicators are already starting to come down. So just to put your pure economist hat on for a moment, is inflation going to take care of itself? Should the Fed and the White House actually maybe take a step back here and say inflation will come down without us having to push things into a recession?

JARED BERNSTEIN: Well, I think that's a complicated question that gets into a lot of debates, some of which would have me a lot more into the Fed's knitting than I'm willing to go in this position. You're right. When I was a pundit, chin flapping, plain, I'd get into this all day. It's a good question.

But from our perspective, we want to respect the Fed's independence. I think the question, again, redounds quite simply to the following-- the Fed is the first and foremost inflation fighter. This president has said we deeply respect their independence. So we're not going to comment on their granular policy. But he has said that this pivot that they've made is a very appropriate pivot, given the challenge of price pressures.

On our side, you've seen well more-- let me put it this way. I have never been part of a White House or any other job in my long political economy career where we've done more to try to help on the economy supply side. I never talked about dwell time in my long career. That's the amount of time that containers spend in ports.

Now I wake up every morning and check dwell times, and they are significantly down. Throughput through the ports is at historical levels. Shipping costs, airfreight costs down significantly. Those actions have our fingerprints on it. We worked closely with the private sector, so there's a real partnership there.

But again, the question-- to get away from the granular, who's doing the right thing and the timing of all that, very complicated point. Nobody has the right answer to that. What you really need to ask is, are the relevant institutions that fight inflation doing what they need to do? And the answer for this White House and for this Federal Reserve is an unequivocal yes.

JULIE HYMAN: Jared, all of us have gotten to get-- had to get a big education about supply chain terminology, to be sure. Jared Bernstein, member of the White House Council of Economic Advisors, thank you so much for your time this morning. Appreciate it.

JARED BERNSTEIN: Thank you.