FBN INTERVIEW WITH JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS

Apr 25, 202417:11 UTC

TRANSCRIPT

April 25, 2024

NEWS PROGRAM

JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS

FBN INTERVIEW WITH JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL

OF ECONOMIC ADVISERS

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FBN INTERVIEW WITH JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL

OF ECONOMIC ADVISERS

APRIL 25, 2024

SPEAKERS:

JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC

ADVISERS

EDWARD LAWRENCE, FBN ANCHOR

EDWARD LAWRENCE, FOX BUSINESS ANCHOR: So, markets plunging on the unexpectedly low GDP reading, the White House eager to stop that bleeding.

Here to try to do that, Jared Bernstein, the chair of the U.S. Council of Economic Advisers.

Jared, good to see you today.

And when you dig into this GDP report — I wanted to first start with this — you find that the first quarter personal consumption grew at 2.5 percent. The non-defense government spending grew at 0.3 percent. But if you look back to the fourth quarter, non-defense government spending grew at 4.8 percent.

So is government spending, was that driving the GDP? Is there a correlation there?

JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC

ADVISERS: It's certainly in the mix. It's one of the components, but it gets a weight that's much lower than consumer spending.

Consumer spending is 70 percent of nominal GDP. Add investment, and you're north of 80 percent. Now if you look at this first-quarter result, consumer spending, real and investment together, grew at a 3 percent annualized rate. And that's almost — think of that as almost a core GDP measure, something that takes out the more volatile inventories or net exports or even the government accounts, which can bounce up and down.

And that's why we think the underlying growth remains steady, solid, strong, just like you heard from Esther George a second ago.

LAWRENCE: So, you're OK with this GDP report?

BERNSTEIN: Yes, I think this GDP report, especially once you get under the hood, you take out some of those more volatile components, consumer spending and investment look great.

In fact, year over year, GDP is up 3 percent. That's a great number. And, look, since the president got here, the average GDP growth rate has been about 3 percent. His — GDP over his term has been the highest we have seen under a presidential term for 25 years in a row.

Add in the very strong job market for that...

LAWRENCE: Sure.

BERNSTEIN: ... and I think you understand the underlying economy is solid as ever.

LAWRENCE: But this president also signed $7.1 trillion in spending.

So we had two market watchers on earlier. They're worried about stagflation. Why isn't this the start of stagflation, lower growth and inflation inching up?

BERNSTEIN: Yes, not even close, in my view.

I mean, you have an unemployment rate that's been below 4 percent for over two years. You have real wages rising for 13 months in a row. And that's helping to fuel strong consumer spending, a number you just shared with me, 2.5 percent.

So, look, when consumer spending and investment are rising at a 3 percent annualized rate in the first quarter, that is nothing like a stagflation scenario. So, I wouldn't see that really anywhere near this report.

Let's not over-index on one quarter. We're — we try to be careful not to do that around here, whether it's an upside or a downside surprise.

LAWRENCE: Now, we have seen a lot of news about energy from this president, limiting LNG exports when it comes to permitting, future permits to non-free trade agreements.

You have seen the Alaska Wildlife Refuge, taking 13.3 million acres off the table. That's putting pressure on gas prices, which have been inching up over the past month. And we have seen overall CPI inflation go up maybe because of that. Are you worried that inflation is not gone, first of all, and it's here to stay?

BERNSTEIN: We have a lot more work to do on lowering costs on behalf of the American people.

And that is absolutely at the heart of our agenda, whether it's negotiating lower prescription drug prices, capping the price of insulin at $35 a month, saving millions of Americans $800 a year on their insurance coverage.

Our work is definitely not done.

(CROSSTALK)

LAWRENCE: But, Jared, Jared, lowering those costs are only for a small portion of Americans. A lot of Americans are feeling all the gas prices going up. They're feeling a 19 percent increase in all items.

BERNSTEIN: I want to talk about that.

LAWRENCE: Grocery items up 21 percent since President Biden came into office. This is what people are feeling.

BERNSTEIN: So, hold on.

LAWRENCE: Yes.

BERNSTEIN: Let's unwrap a lot of that, because I do want to get to the gas price.

LAWRENCE: Yes.

BERNSTEIN: So grocery inflation, at least according to the Consumer Price Index, has been zero for the past two months.

Now, that doesn't mean that grocery prices are back to where we'd like to see them, but grocery inflation has flattened a great deal. And that certainly helps, especially at a time when people's paychecks are beating prices. Again, 13 months in a row, in a year-over-year basis, mid-wage workers, wages have beat prices. Their buying power is going up.

Now, let's talk about gas. So, one of the things that we have seen in this economy is some of the highest levels of domestic gas production. We have also seen dramatically high levels of renewable production. So, we are firing on both signals — on both of those signals really aggressively.

We have record production of traditional sources, record production of renewable sources. Now, obviously, we'd like to see those renewable sources continue to grow and, in the interest of fighting climate change, take over from the others.

But, at this moment, we have American oil producers making record profits and record production, while we're still delivering on the renewable side. We think that's a good record, one we will defend all day.

LAWRENCE: And when you talk about — you talked about the last two months. Yes, food might be flat, but you talked about when President Biden came into office, and I think that's what folks are looking at. Food is up 21 percent.

Now, I want to ask you about the tax hikes or the tax plan. We have heard President Biden come out and say that he would let expire the — former President Trump's tax cuts because they disproportionately help the wealthy.

But when we look into these numbers, the American Tax Foundation finds that taxes would go up on people making less than $400,000 a year if those tax cuts expire.

BERNSTEIN: Well, first of all, I will speak to that.

I just want to make sure that we're straight on the grocery point. Look, we're never going to get grocery inflation back to where we want it if we don't have more months like we have had in the past couple of months with zero inflation on groceries. So I wouldn't brush that off, as I think you just kind of did. That's how we get back to where we need to be.

We're not there yet, but that shows we're on the right track.

Look, this president has said many times over he's not going to preside over tax increases on anyone under $400,000, and he will consistently, as he has done, work with Congress to make sure that a — to make sure that reality sticks.

LAWRENCE: But how do you do that if you have a divided Congress? So let's say the tax cuts expire and we have a divided Congress. How do you get them on board?

We have seen what's happened up to now.

BERNSTEIN: Well, you might well ask, how do you pass historic legislation, standing up domestic semiconductor industries, standing up some of the most and deepest investments in clean energy we have had?

How do you pass legislation, bipartisan legislation, like the infrastructure plan? This president has a track record of, A, constantly pulling legislative rabbits out of hats, and, B, consistently being underestimated on that front.

So when it comes to getting the — and, by the way, think about the emergency supplemental. Again, people thought that wasn't going anywhere, but President Biden stuck with it. So I say, let's give the president credit where it's due and watch what happens.

LAWRENCE: And, Jared, in the back rooms there at the White House, is there concern about this slowing of the growth? You heard Esther George say that she believes that growth will slow throughout the course of this year.

As the economy slows towards the election, voters may get fed up with that slower growth. Is there a concern? What's the feeling in the White House about this slow growth that is expected to come, if it unfolds the way...

(CROSSTALK)

BERNSTEIN: Well, I mean, we really haven't seen much in terms of slow growth yet.

Let's talk about the job market, because that's really what matters to people. You don't eat GDP. Your paycheck matters most. And, there, you have seen growth continue to defy expectations to the upside, stronger job numbers than have been expected, and, again, an unemployment rate that's been below 4 percent for over two years. That's generating real wage gains.

On the GDP front, this president has a 25-year record when it comes to real GDP growth. So I think probably one thing you may be referring to is a kind of downshifting that has to happen as you grow — as you grow at a breakneck pace out of the pandemic-induced recession. We have to settle back into more steady, stable growth.

And I think that's one of the things you're seeing in reports like the one this morning. But in terms of growing at least at or not above trend, if you look at least the year-over-year measure, 3 percent for this GDP, and the job market numbers I just cited, the economy remains strong, solid, on a steady, stable path.

LAWRENCE: So you think that maybe the markets have overreacted then today to all of this economic data that we're seeing?

We get PCE inflation tomorrow.

BERNSTEIN: Yes, I mean, I'm not going to comment on the wiggles and waggles of the markets from day to day. And I know you said something in the introduction I'm going to come out here and try to calm the markets.

(LAUGHTER)

BERNSTEIN: Not true. I'm just going to call the data like I see it, and that's what I have tried to do with you for the last few minutes.

LAWRENCE: Yes, I appreciate it.

Jared Bernstein, thank you very much from the White House. Good perspective. Always appreciate you coming on last minute.

BERNSTEIN: My pleasure.

LAWRENCE: Yes, appreciate it.

END