According to a member of the US President’s Council of Economic Advisers, the Covid-19 pandemic, not Joe Biden’s economic policies and stimulus packages, is the “real cause” of high inflation.
It was put to Heather Boushey in an interview over the weekend that a major criticism of “Bidenomics” and the massive boost it had brought was that it had, to some extent, fueled inflation.
Boushey, speaking to CNBC’s Charlotte Reed at France’s Aix-en-Provence economic forum, dismissed this idea. “What the president did when he first took office, the US bailout — we were in the middle of a pandemic and he enacted policies that gave us enough flexibility to deal with whatever challenges came our way,” she said.
The US bailout, a $1.9 trillion relief package, was announced in January 2021 and passed by Congress in March of that year.
“If we had done that and inflation in the United States was higher than anyone else, you might argue that it was about those policies,” Boushey added.
“But the reality is that’s not what happened — yes, the United States had inflation, but so did other countries that didn’t follow the same policies.”
“So inflation, the real cause was the global pandemic, and that’s about the resilience of our global supply chains.”
Boushey expanded on her point, saying this was why the US was “making the investments we need”.
The world’s largest economy was also, she added, “encouraging our friends and allies around the world to work with us to promote the resilience in supply chains we will need, and to keep us away from of fossil fuels, which have these volatile prices, towards clean energy.”
The latter scenario would provide “more stable prices over time, escaping some of the disruptions the global economy can cause to domestic prices.”
US inflation rose 4% year on year in May, according to the Labor Department, the lowest annual rate in more than two years. By mid-2022, US inflation exceeded 9%, marking a four-decade high, with market commentators citing multiple factors such as congested supply chains, excess demand for goods over services and trillions of dollars in Covid-related stimulus spending.
Biden’s approval ratings hit an all-time low last year with polls showing Americans were unhappy with the state of the US economy and rising gas prices.
During her interview with CNBC, Boushey also noted that inflation “has been down for 11 months now” and that the US has also “seen stronger growth than other G7 countries, and we haven’t seen higher inflation.”
— CNBC’s Jeff Cox contributed to this article.
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