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30 Sep 2023
Ian Hanchett

NextImg:White House on Elevated PCE Inflation: We're 'Doing So Well' -- House GOP Should See People Made 'a Lot of Sacrifices'

On Friday’s broadcast of CNBC’s “Squawk on the Street,” White House National Economic Council Director Lael Brainard reacted to the August personal consumption expenditures (PCE) price index showing the inflation rate going up 0.4% on a monthly basis and 3.5% on a yearly basis with core PCE going up 0.1% on a monthly basis and 3.9% on a yearly basis by stating that it’s “absolutely good news.” She also responded to questions on the rate still being high and other factors that could keep inflation high by stating that the economy is “doing so well.” But also stated that “House Republicans should be recognizing the American people have made a lot of sacrifices.”

Co-host Sara Eisen asked, “So, I’d love your reaction to today’s inflation print. I would think that it’s good news, certainly, the market’s taking it that way, to get core PCE below that 4% level and really starting to step down. Do you think we’re on a sustainable path here to much lower inflation?”

Brainard answered, “Well, you said it, I think the inflation data today is absolutely good news. It’s what we’ve been expecting to see. If you look at core inflation in particular, it’s running at 2.2% on a three-month annualized basis. That is really very encouraging. We’ve seen unemployment now down below 4% for 19 months in a row during a period where inflation has come down and core inflation, particularly, is now in the range that it was pre-pandemic.”

Eisen then asked, “But, yet, it’s still elevated, isn’t it? We’re still looking at 3.9% core inflation. Services inflation in particular is a problem. And then you have these forces out there, higher gas prices. And I know that’s not into core, but it could seep its way in, and it’s certainly important. The strikes, UAW, potentially now healthcare workers, all of that — couldn’t it threaten to keep inflation elevated?”

Brainard responded, “So, I have to say the main story of all the naysayers was that you couldn’t get core inflation to come down without a big increase in job destruction. That is not what we’ve seen. We’ve seen continued job creation and inflation at the core has come down into the range that we saw pre-pandemic, 2.2% on a three-month, that’s very consistent with where people had been before the pandemic. Yes, I think there are risks to the economy. The economy, however, has proven remarkably resilient, and I think the real question right now is we can’t take that resilience for granted. And if you look at what’s going on with House Republicans on the Hill in particular, I think you really just worry about an unforced error like a completely unnecessary shutdown putting the economy at risk unnecessarily at a time when it’s doing so well.”

Later, Eisen asked, “As far as the economy goes, Director Brainard, I think the fact that this shutdown is coming at a time where there are a lot of potential shocks. Interest rates continue to rise in the market. Obviously, that’s a headwind for consumers and the overall economy. We have the resumption of student loan payments coming at the very same time. Gas prices have risen and oil prices continue to rise. This is all hitting. What are your expectations for growth in the last quarter of the year and into ’24?”

Brainard answered, “So, you’re exactly right. A lot of these risks come at a time when I think House Republicans should be recognizing the American people have made a lot of sacrifices. They are contributing to a very strong economic recovery. The economy has been very resilient. The last thing we need is to put all of that progress, all of that hard work, so many Americans coming off the sidelines, going into their workplaces, why put all of that at risk with an unnecessary shutdown?”

Follow Ian Hanchett on Twitter @IanHanchett