On Monday’s broadcast of CNBC’s “Squawk Box,” White House Council of Economic Advisers Chair Jared Bernstein acknowledged that’s “fair” to point out that prices are still elevated and things are still expensive even though the rate of inflation is going down, but questions about inflation hurting President Joe Biden’s job approval numbers are “stale” because “the approval rating…invokes a level of political tribalism that has a lot to do with things other than how the economy is doing.” And “the fact that inflation went from 9 to about 3%, is registering with folks, and especially when it starts generating real wage gains.”
Co-host Joe Kernen referenced President Joe Biden’s low approval numbers on the economy and said only 36% approve of the President’s handling of the economy. He added, “I’ll tell you what I think it is, Jared. Inflation is — the rate of change is coming down, but stuff that people bought two or three years ago, because of the initial increases, things are still expensive. They might be going up less, and wage growth only recently has started keeping pace with that. So, people still feel like they’re behind. I think that’s got to be it. And I don’t think you can deny it. It’s probably not a good idea to deny that people are feeling that.”
Bernstein responded, “I am going to agree with you on this angle of when you get down and you drill down to what we’re actually doing, as opposed to these kind of more abstract 40,000-feet-up questions, 70% — 76% of people support the infrastructure law, the bipartisan infrastructure law, and that’s obviously to repair highways that they drive on, broadband Internet that they use, clean water that they drink. 72% support the CHIPS Act. And that’s obviously critical to, not only strengthening supply chains, but standing up the domestic semiconductor industry here. About two-thirds support the Inflation Reduction Act. And by the way, there’s — some of those statistics that I think you’re citing are getting a little bit stale. So, University of Michigan sentiment is actually at its highest level since October of ’21, consumer confidence, highest level since July of ’21. Some of these things are starting to move in the right direction. And I think one of the reasons for that is something else you said, which is real wage gains. Look, I think you make a fair point in terms of how people feel about disinflation, which is less pleasing than deflation. But when you have real wage gains, essentially, your consumption basket becomes more affordable, so that’s also moving in the right direction.”
Later, co-host Scott Wapner asked, “It’s pretty telling, as we talk about GDP and the GDP now from the Atlanta Fed at 5.8, which was stunning, obviously, to everybody, any president who had numbers like that, a 5.8 GDP, wages where they are, unemployment rates low, consumers are strong, they’re keeping the train on the track, and going at a pretty good clip, and yet, the polling numbers, as we talked at the outset, are just 36%. It’s a dramatic disconnect, obviously, but it also points to the fact that inflation is driving the train, and as long as inflation remains — even if it remains where it is, it’s still sticky. And how do you compete against that narrative? Because otherwise, you could build a case that said, you know what? The economy’s pretty good, but the people don’t care because they’re tired of paying higher prices and they think the President is at least, in part, to blame.”
Bernstein answered, “Look, I hear where you’re coming from, and I get this question all the time, but I feel like that line of questioning is starting to get a little bit stale, and the reason I say that…is you’ve got to get into some of the guts of what these polls are telling us. Now, I understand the approval rating, and I think that that invokes a level of political tribalism that has a lot to do with things other than how the economy is doing. From my perspective, as the Chair of the CEA, look at the University of Michigan’s sentiment, it’s at its highest level since October ’21, it’s been coming up, same thing with consumer confidence. Job satisfaction is at a 36-year high. The consumer board satisfaction survey is the highest level it’s been since they started tracking that in ’87. You talk about inflation, inflation expectations are down in the University of Michigan survey. So, I think, if you get under the hood, you look at some of the more recent trends. We’re beginning to see, particularly — and I think it is disinflation, I think it’s the fact that inflation went from 9 to about 3%, is registering with folks, and especially when it starts generating real wage gains. So, look, I think the remarkable thing in this economy that you didn’t mention is we got all that inflation reduction without giving up anything thusfar on the unemployment rate, for aficionados of the Phillips Curve, that’s a zero sacrifice ratio. And that’s a strategy to get real wages going up, maintain [a] tight labor market with easing inflation, real wage gains. That’s precisely what we’re seeing, and it’s starting to show up in some of these poll numbers.”
Follow Ian Hanchett on Twitter @IanHanchett
