James S. Brady Press Briefing Room
3:16 P.M. EDT
MS. JEAN-PIERRE: Hello. Good afternoon, everybody.
Q Good afternoon.
MS. JEAN-PIERRE: Okay. So today I'd like to welcome Jared Bernstein, member of the Council of Economic Advisers, back to the briefing room. Jared is here to talk about the strong economic progress we're making and the enormous opportunities Congress has ahead to continue that progress.
We're really glad to have him here again. And, Jared, I welcome you back to the podium.
MR. BERNSTEIN: Well, thank you so much. I have an opening statement, after which I'll take questions.
President Biden, who grew up in a family where the price of gas was a kitchen table issue, has elevated easing price pressures as his top economic priority. We economists think of this in terms of inflation, inflationary expectations, interest rate changes — a vast array of complicated concepts and measurements.
But the fact is that it comes down to affordability and the need among American households for a bit of breathing room in making ends meet. Therefore, we're very happy to report that the current drop in the price of gas, down 50 cents per gallon over the past 34 days, is one of the fastest decline in retail gas prices in a decade.
At current prices, the average American driver will spend about $25 per month less on gasoline than they would have if prices had stayed at their June peak. Economy wide, that means American drivers are saving around $190 million each day from lower gas prices. And since gasoline prices affect the prices of other goods and services through transportation costs — food is a good example — both households that drive and households that don't yield some benefit from lower gasoline prices.
Now, the decline in retail gas price is not a daily blip. The chart behind me shows that gasoline prices have declined every single day for the past 34 days. Just yesterday, we witnessed the largest single-day decline in national gas prices since 2008.
As we all know, in contrast to the, quote, "law of one price" they teach in Econ 101, gas prices vary from place to place. But according to an industry analyst, around 20,000 gas stations across over 30 states are now charging less than $4 per gallon.
Now, we know this is a volatile market; that's one reason we're highlighting a trend here and not a blip. But if you look at the about $20 decline in the price of oil since early June, as well as the drop in — that's on the next chart — as well as the drop in the wholesale gas price, we think it's reasonable to expect more gas stations to lower their prices in response to lower input costs and thus, barring unforeseen market disruptions, to see average prices fall below $4 per gallon in more places in coming weeks.
While there's a lot that goes into setting the global oil and gas price, the historic actions taken by President Biden to address the impact of Putin's invasion of Ukraine have helped and continue to help to increase the global supply of oil and therefore are in the mix of factors driving down the price.
Because the President's announcement on releasing 180 million barrels from our Strategic Petroleum Reserve and another 60 million from our global partners was back in March, I suspect there are people who forget about this critically important intervention in energy markets. But this action is very much in play in today's market, currently releasing a record 1 million barrels of oil per day on average and 84 million barrels so far.
These releases have had an outsized effect at a time when the market is especially tight. In fact, as one leading oil market analyst put it, quote, "The U.S. has become the world's oil barrel of last resort, single handedly keeping prices in the energy market from exploding even higher by selling a large chunk of its Strategic Petroleum Reserve." End quote.
Two further points before I take — we take your questions.
As gas prices are coming down, our labor market, which is where working-age families get most of their income, remains historically very strong. Job gains continue to come in at historically high levels. Private sector employment has surpassed its prior peak. And the jobless rate has been at 3.6 percent — just about its pre-pandemic level — for four months in a row.
As someone who has carefully tracked labor market recoveries for decades, I assure you that this one is already in the record books for the speed of its recovery. And there's no question that the American Rescue Plan, with its shots in arms and checks in pockets, helped to achieve that goal.
Finally, while the lower gas price creates some much-needed breathing room, American households need a lot more. Congress has enormous opportunities to help by continuing progress on both prescription drug costs, the cost of health coverage, and long-term growth with CHIPS Act.
I cannot overemphasize the importance, at this moment in our economic expansion, for taking action on these crucial supports for family budgets and for long-term growth and economic security.
Thank you. And Karine will call on folks.
MS. JEAN-PIERRE: All right. Okay. Go ahead, Jeff.
Q Thanks, Karine. Jared, is the administration preparing for a recession? And how do you react to companies, like Apple, and banks saying today that they intend to slow hiring because the economy is slowing?
MR. BERNSTEIN: So let me tell you a little bit about the way the National Bureau of Economic Research Business Cycle Dating Committee — that's the group that decides recessions — makes their call.
They weigh a couple of variables pretty heavily, and one of them is payroll employment. Now, based on payroll employment — which, by the way, of course, relates to the unemployment rate, 3.6 percent — an historically very low unemployment rate for the past four months — those kinds of statistics are anything but recessionary.
Now, that's very much a look at the job market today.
Slightly more forward-looking is: If you look at consumers — and, by the way, the bank reports, I thought, had this in their earnings reports — they talked about the strength of the American consumer. If you look at retail sales from just last week, you'll see American consumers still helping to fuel an economy that's delivering really remarkable job gains.
So I think — and, by the way, that in itself relates to something I kind of referenced in my opening comments: the fact that not only do people have the benefit of an historically strong job market behind them, a real tailwind in this economy, many also still have excess savings; this is one of the things that's helping to fuel consumer spending, which, again, is 70 percent of our economy.
So I think if you look at the strength of the current economy, if you look at the strength of the labor market, if you look at the strength of consumer spending, you would conclude that where we are right now remains solidly within expansion.
Q Okay. And just one follow-up to that. I'm sure we all remember, a year ago, other colleagues of yours stood here and said inflation was transitory and was not going to last, and it was certainly not going to go up to where we are now. Do you think it's possible in a couple of months you might regret standing here and saying we're not about to be in a recession?
MR. BERNSTEIN: Well, I want to be very clear what I'm saying. What I'm saying is that based on — based on consumer spending, based on payroll employment, based on where the unemployment rate is, I think we can confidently say that 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.
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 were 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.
And so this was a period where we, you know, hadn't seen new variants of the — of the virus; where the war in Ukraine, of course, was not yet a reality.
So I think that if you look at the — 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 — that's worth going back and seeing.
MS. JEAN-PIERRE: Go ahead, MJ.
Q Jared, Senator Manchin said that he is a no-go on the climate deal because he has concerns about inflation. Is there a scenario where you all try to wait for better inflation news and then try again on that front?
MR. BERNSTEIN: Well, let me just start by saying, you know, "better inflation news," I mean, that's a — again, getting into a level of forecasting that I'm not going to do in this period of uncertainty.
What I can very much assure you, though, is that the price of gas is considerably lower in July than it was in June, and this is something the President referenced when the June CPI report came out.
We're talking about, as I mentioned in my opening comments, a situation where the price of gas is falling at about the fastest rate it has in a decade and where more than 20,000 gas stations now are selling gas for less than $4 a gallon. That will show up as some easing of prices.
I think when it comes to reconciliation, the President has a view that was very clearly laid out in a statement last Friday: He will always follow a legislative path to get the deal done for the American people to deliver the kind of relief, both near term and long term, that he came here to administer. But if — if that — if part of that legislative path to reconciliation closes, we have other options.
We can certainly pursue reconciliation with two critically important policies — lowering the cost of prescription drugs and lowering the cost of health insurance premiums to folks who get that from the — from the exchanges.
Particularly on the — those are both really important. Let me say a couple of words about them.
When you're talking about the exchanges, you're talking about 13 million people who are looking at a potential increase in their average premiums of $800 a year.
Now, the Center on Budget, where I used to work, did a calculation showing that for a couple 60 years old with $45,000 — so not rolling in dough, exactly — failing to extend these enhanced premiums would raise their premium costs by $1,900.
Now let's talk about prescription drugs for a second. Presidents from both parties have long tried to accomplish this critically important measure to stop prohibiting Medicare from competing in — in the market to lower drug prices for our seniors.
Now, I think you have to ask yourself why it is that in other countries people pay two to three times less than we do for the same drugs. The same pill costs two to three times more here than it does there.
The relief that we could deliver to our seniors, from allowing — allowing prescription drugs to compete, as the President has stressed, is not just essential for their living standards and their wellbeing; it is a way to actually ease inflationary pressures.
So this is a very clear choice of whether you stand with Big Pharma or whether you stand with American seniors and the Medicare program — which, by the way, would be $100 billion better off over 10 years if we can achieve this in reconciliation.
Now, the Democrats appear to be aligned on that. And that — that, along with the — with the premium coverage, would be an absolutely huge win for reconciliation.
MS. JEAN-PIERRE: Go ahead, Ashley.
Q Thank you. Following up on Jeff's question about transitory inflation, I'm curious what made the White House realize that the phrase was inaccurate and also politically problematic.
MR. BERNSTEIN: I think it has to do with the — I'm going to use an economics word — the periodicity, which is —
Q The what? (Laughter.)
MR. BERNSTEIN: I'm — see, this is — this is why you do a better job than I do.
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 going to 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 — the temporal cadence implied by that word — led to a level of ambiguity that wasn't serving the debate very well.
Q And what about just the second part about "politically problematic"? Was that something you were hearing from voters, seeing show up in polls that that language was hurting the President (inaudible)?
MR. BERNSTEIN: I think that when it comes to, you know, politically problematic, you've heard the President say in recent days that this is — that the inflation is unacceptably high and that bringing it down is his absolute number one domestic priority. And I think that that is all you need to know in terms of what he is dispatching his economics team to do in that front.
Now, I also think — and let's not lose this, because I think it's really important, and this is why I tried to focus in on my comments at the top — is that his actions — this is — this is not just forward-looking; it is, but it's not just forward-looking. Actions he has taken thus far are providing real relief to the American people, okay?
His release of oil from the Strategic Reserves, his increase in E15 ethanol — these are not the only reasons that the price is behaving as you saw in those charts, but they are in the mix.
The President's actions taken thus far are helping to provide real relief, real breathing room for the American consumers at the pump.
So this is not just an aspirational goal of this President. This is something he and his team are actively working on.
MS. JEAN-PIERRE: Go ahead. In the back.
Q Thank you, sir. I have two questions. The first quick one is — I guess, does the council have an estimate for how much the administration's regulatory changes have combatted or contributed to regulation — to inflation thus far?
MR. BERNSTEIN: I think, in many ways, we've been talking about a lot of that already. I mean, I just mentioned the E15 ethanol waiver, so that's a waiver that helps increase the supply of gas — gasoline, particularly in the Midwest.
I think, certainly, if you broaden, sort of, the regulatory scope to consider executive actions and rule changes, you see a lot more. I mentioned the Strategic Reserve release.
We've talked — we haven't talked about this yet, but the President has made real progress in helping to ameliorate food price pressures through issues that include double cropping, taking action on fertilizer prices, ocean shipping.
So all of these are actions that he's taken. In some cases, they've involved legislation, but in many cases they haven't.
Q And then my second question: Tomorrow marks the one-year anniversary of President Biden insisting that high prices and inflation, in the President's words, were "expected to be temporary." A lot of my colleagues have asked similar questions, but I'm wondering how much faith can the American public put in future White House assessments about the economy, about inflation after they saw that inflation number increase month after month, and before the Russian invasion of Ukraine?
MR. BERNSTEIN: Well, let me say two things. First of all, I tried to answer as fulsomely as I could, some of that — part of that question earlier. But let me ask you to focus on what we're trying to talk about today, which is something that is happening in the here and now.
The chart is not up, but that first chart, which we can certainly make available to you, that shows we're not talking about looking around any corner here. We're talking about what has happened in the past 34 days to prices at the pump. They've fallen 50 cents, and you heard me go through some of the numbers in terms of the relief for American drivers.
At the same time, we are not stopping there. Okay? This is nothing close to a victory lap, because we have much more to do to achieve the President's agenda of helping families get some breathing room in this tough environment, which is characterized by, of course, such highly elevated prices.
Now, if you can help people with prescription drugs, drugs that cost two or three times less in other countries for the same pill; if you can help a 60-year-old couple with a $45,000 income not have to pay another $1,900 to get their insurance coverage, you are accomplishing the President's goals.
Now, to do that, we need Congress to align and work with us. And, you know, Democrats — many Democrats are there when it comes to prescription drugs.
This is something that President Trump said he wanted to achieve. And, you know, he didn't get there. This President is pushing hard to achieve that goal.
One last point on this. I've talked about mostly near-term relief, because that's so important for families who are seeking a little bit of breathing room right now. But there's another piece of legislation on the docket. And that, of course, is CHIPS. And this is something that has had real bipartisan support. I believe it got — I believe an earlier version got 68 votes in the Senate.
I think it is absolutely and critically important for this nation to invest in domestic production of microprocessors. Again, not only would this be a criti- — not only would this be a highly favorable investment for growth and for jobs, it would be disinflationary, because one of the areas where we see inflationary pressures is, of course, in autos, which now very much depend on chips.
To be clear, that's not a near-term intervention. That's not going to show up, you know, in the next couple of months. But longer term, absolutely. Supply chain, same thing.
Q Aren't you having it both ways, Jared? Because 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.
MR. BERNSTEIN: Look, I think that — that there's — there's no both-way thinking here at all. I think that there has been a consistent, I think, pressure on this White House to try to do everything it could to ameliorate inflationary pressures. And 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.
So what did he do? He put his head down and got to work, and got us to work, to do everything we could to achieve that goal.
He then presided over the largest historical release of barrels of oil from the Strategic Reserve — 180 million barrels. Then he talked to global partners to get them to kick in another 60 million.
Q So when they rose, it was Putin's fault. When they're coming down, he gets the credit. Is that (inaudible)?
MR. BERNSTEIN: Yeah, I very much disagree with that framing. I think what's happening here is a President who is working tirelessly to address the largest constraint — probably the toughest constraint — facing American households right now: the budgetary impacts of these elevated prices. And we're showing you here today some real results, partially — that partially derived from concrete efforts he's taken.
MS. JEAN-PIERRE: All right. Go ahead, Eugene.
Q With the different economic data releases we've seen, they aren't really consistent with each other. So, out of all of the choices of indicators, what does the administration see as the most important indicators for how the economy is doing?
MR. BERNSTEIN: That's a great question. So, there is no most important indicator at the CEA.
Q A group of indicators then.
MR. BERNSTEIN: Yeah, a group of them. So, at the CEA, we — we just — we just look at all of them.
And I think where I would take your question is that — we don't give all of them — it's sort of like I was talking to this gentleman before about the different weights that economists put on these variables when we're trying to assess the conditions of the business cycle.
I think this is particularly relevant in the area of GDP. So, in terms of real GDP, if you look at consumer spending and business investment, you actually see some very solid numbers. And these are some of the numbers — and particularly consumer spending — retail sales, consumer spending, personal income, taking out transfers — these are some of the measures that the Business Cycle Dating Committee look at, and so we're looking at them too.
And if you get under the hood of the GDP report from the Q1 — and we'll probably be — and we'll certainly be getting under that same hood in Q2 — one of the things you see is consistently strong consumer spending.
Now consumer spending is 70 percent of our economy. That's actually uniquely high. In Europe, it's about 55. In China, it's about 45. So, you know, I could tell you stories about my family and some of the orders that I've seen come in from our own consumer preferences. They're — (laughter) — this is a very —
Q Please do. (Laughter.)
MR. BERNSTEIN: This is a — I won't. I'm — this is a very acquisitive nation —
MS. JEAN-PIERRE: (Laughs.)
MR. BERNSTEIN: — when you compare our consumer spending shares to other countries.
So, when you're looking at an economy with a 70 percent consumer spending share, and then you look at a labor market, which is, of course, as I said in my comments — which is, of course, where most working people get their income; it's from the labor market — and you look at the level of elevated savings, which, again, has the fingerprints of the Rescue Plan on it, you get a sense of what we're looking at in terms of economic indicators that continue to fuel pretty robust consumer spending.
And that's a — that's an important, I think, element of the current economy.
MS. JEAN-PIERRE: Let's take a few more. Go ahead.
Q So, a quick one on student loan debt and cancellation. Does the White House believe — does the White House have any concern that canceling any amount of student loan debt will further aggravate inflation? And what kind of a status update can you give us on the President's deliberations on that?
MR. BERNSTEIN: I'm not going to get ahead of the President and give you any kind of a status update.
What I will say are things that, you know, I myself have said and NEC Director Brian Deese has said — that if you think about the inflationary implications of student debt relief and you think about the — those of restart — restarting payments — they push in different directions. And we think that the — we think, broadly speaking, that the — those effects would essentially neutralize.
MS. JEAN-PIERRE: Go ahead, Nancy.
Q Thanks, Jared. You said over the weekend that the President is going to look to enact his climate agenda with or without Congress. But realistically, how much of it can he enact without Congress, especially now that the Supreme Court has tied his hands to some degree when it comes to emissions regulations at the EPA?
MR. BERNSTEIN: I think, realistically, there is a lot he can do and there is a lot he will do. The President will aggressively fight to attack climate change because he knows it's one of the reasons he's here. And it is absolutely core to transitioning from where we are to where we need to be.
Now, I think I've given you a fulsome sense today of — that both of the sides of that transition are important: affordability at the pump, yes, but we also have to plot a path to clean energy.
I said over the weekend that it's kind of unfathomable to me that — that one wouldn't appreciate this urgency. If you look at the costs to our economy of floods, of droughts, of fires; if you look at the global economy and you see the kinds of heat waves that are occurring right now, scientists will tell you all day that this very much relates to global warming. You're talking about something like 100, 120 billion dollars a year in costs to our economy.
If you think about the geopolitical costs occurring when a Russian plutocrat weaponizes energy and fossil fuels and funds this unjust aggression against Ukraine with it, you get another sense of just how important it is to intervene. And this all comes from conversations we've had with the President. That's how urgent this is.
Now, you asked what can he do. Let me start by telling you a little bit about what he has done. He has taken unprecedented action already to tackle the climate crisis. He's invoked the — and this is non-legislative — he's invoked the Defense Production Act to make more clean energy in America. He's jumped-started the offshore wind industry. He has set the strongest emissions standards ever. And it is our firm belief that he can and will continue to do so if the legislative path is closed to him. But he will also pursue that path as well. And this is how important and urgent it is to him.
Q So then why do you think that — you know, you just laid out the costs of inaction.
MR. BERNSTEIN: Yep.
Q Clearly, Senator Manchin believed that the cost of action was too high in the face of high inflation. Why do you think you weren't able to convince him that the cost of doing nothing would be higher?
MR. BERNSTEIN: You know, I'm just — I just don't have a great answer to that question. I mean, I think what we can do — and, you know, I hope I've been a little bit convincing here in my conversation, but, you know, I've worked for Joe Biden for a long time, and I've found him to be profoundly convincing in this area.
And, you know, he's someone who's been in the Senate for decades, so it's not like he grew up in a world where climate change and global warming were, you know, the top of the agenda. But his understanding of that, his deep appreciation of the urgency of what I've just described of you is — is as high as I've been stressing in my comments today.
So, I find — you know, I, personally, and I think lots of other people — there were 81 million people who voted for him — find him extremely convincing on this. And when he says — you know, when "Fightin' Joe Biden" says he's going to keep fighting for this issue, you know, I think we should all believe him.
MS. JEAN-PIERRE: Two more. Go ahead, Franco.
Q Hey. Thanks, Jared. You talked earlier about the importance of the prescription drugs efforts, but you also kind of took a sigh of deep breath when asking the inability to convince Manchin on climate change. I mean, how — or how is the reduced or the smaller reconciliation package — I mean, does the White House feel that's a defeat? And if not, how not so?
MR. BERNSTEIN: Not even close. I mean, the — accomplishing the prescription drug agenda that the President has been talking about and underscoring since before the campaign — I was his chief economist when he was the Vice President lo these many years ago, and he was talking about the importance of it back then.
I remember briefing him on these points about how prescription drugs are two to three times more expensive here; how we could save Medicare $100 billion over 10 years by injecting competition into — into this — into this space. That just resonated with him, I think, probably ever since he's been aware of the issue. And achieving that would be an absolutely landmark goal not just on behalf of American seniors and their living standards, but on behalf of this absolutely essential and much-loved program called Medicare.
Q But considering where the original proposal was, I mean —
MR. BERNSTEIN: So, let me — I see where you're going. So, considering where the original proposal was, I want to refer you to the comments I just made.
Sure, we will — this President will always try to pursue a legislative pla- — path to get the best deal for the people who sent him up here to do just that.
But if that path closes, he will find another path. And he'll keep working on the legislative path.
Joe Biden is someone who's been pulling legislative rabbits out of hats for, you know, 30 — for three or four decades now, and he's going to continue to do so.
So, whatever paths are open to — whatever paths are open to us, we will take. When those paths are closed, we're going to find other paths. That's how important this agenda is.
MS. JEAN-PIERRE: Go ahead, Jim. And then Kelly O, you'll have the last one.
Q Back to reconciliation. Obviously, one of the parts of the President's agenda had been a global tax deal that this administration has led the world in sealing. But now, because of the dropped tax provisions in reconciliation, the United States will not be in compliance with the deal that it negotiated essentially. How can you possibly expect the rest of the world to follow along if the U.S. is not going to actually be in compliance with the deal?
MR. BERNSTEIN: So, let me say a few things about that, kind of warming up to the answer, because I want to just give a little bit of a runway. First of all, I do want to give — I do want to give a real shout-out to Secretary Yellen, who's worked very hard in this space and has accomplished a lot in terms of working with our global partners.
And I think one of the things you got when Joe Biden came to the White House is a President who was going to reengage with global partners in a way that delivered the progress we've made thus far.
I also want to say something about this idea that has come up in some recent discussions that somehow increasing taxes leads to higher inflation. It's hard for me to even put the phrase together because I think it's — it's really — it's really the other way.
When you — when you increase taxes, particularly on those the most — particularly on those at the highest incomes — so you're not talking about people who are liquidity constrained for whom inflation is nearly the problem that it is for middle- or lower-income people. When you're talking about tax increases for those at the top of the income scale, this is deficit reducing, and reducing the deficit is disinflationary, not inflationary.
By the way, just a side note here — I was just looking at some of these numbers in my preparation for the shows I did yesterday: The budget deficit has come down 77 percent in this fiscal year, in the nine months of this fiscal year, from October 21 through June 22. That's the largest decline on record over that part of a fiscal year. And I know some people say, "Well, that's all just spending coming off of the Rescue Plan." In fact, spending is down — spending is down eigh- — I think I have these numbers right. Yeah. Spending is down 18 percent. Receipts — tax receipts are up 26 percent.
I'll put these later out on my blog today, @EconJared46. (Laughter.) I'm going to put these out, so I have these I — I'm pretty sure I'm remembering them correctly. So —
Q About the global tax deal?
MR. BERNSTEIN: Yeah, I'll get back to that in a second.
Q Okay.
MR. BERNSTEIN: So, deficit reduction — deficit reduction is disinflationary, and tax increases, you know, fit into that.
Now, in terms of the global tax deal, there's a lot of moving parts going on with that right now, Jim. The President remains fully committed to this; the Treasury Secretary fully committed to this. We have a staff that's worked on this intensely for month after month after month. And it is — it is — any rumors of its demise are hugely premature.
MS. JEAN-PIERRE: All right, Kelly O, last question.
Q I have one quick follow-up and then one question. On the issue, right off the bat, that Jeff asked about — preparing for a recession: Understanding that you made it clear that you don't see those factors, how important is it for you to give the President guidance on what could trigger a recession so that he can take action?
And then secondly, what have you learned from your national security colleagues about what came out of Saudi Arabia and how that might affect gas prices and your expectations on what OPEC and others might do in a few weeks? "In a few weeks" is what the President had said.
