Jason Furman in 2013, when inflation was much lower than it is today. Photo: Andrew Harrer/Bloomberg via Getty Images For the first time in 30 years, inflation is significantly chewing away at Americans’ buying power, hiking the price of gas, groceries, and rent. On Wednesday, the Bureau of Labor Statistics released its latest report showing 6.2 percent inflation in October, the fifth straight month that it has gone up by more than one percentage point.
Backing up a little bit, there’s a number of theories out there for how we got here. Where did we go wrong? When you say the White House should have acted a bit differently in March, are you talking about spreading those payments out over time, or were there other things that you think they could or should have done?
There’s a real distinction between year in, year out policies and one-time policies. I have a lot of concerns about universal basic income and, in particular, how it would be financed, how it would take away certain incentives that the current system creates for work or for help looking for jobs and the like. But I’m not worried UBI would cause inflation. I think it doesn’t make sense for a whole lot of other reasons.
What if inflation does stay as high as it is, or if it gets even higher. Is that a possibility? If so, what would that scenario look like? Do people who are thinking about financial assets ask you, “Hey, should I move all of my money into crypto?” You said that the ball was in the Fed’s court at this point. But we’ve seen the Biden administration take steps recently to try to alleviate some of the supply-chain issues. Notably, in the past couple of days, they’ve expanded hours at ports on the West Coast. Will something like that make a difference?
A tone shift is different, though, than actually raising rates. Do you think it will end up having to? Clearly, the administration has a pretty ambitious spending plan and big political goals, whether that’s infrastructure or some of the social policies. How do you strike a balance between that type of spending and the danger with inflation?
A lot of people are watching the GDP figures, they’re watching the jobs figures — if hiring slows and the economy is not as robust as people think or hope, could we actually need more stimulus? People talk a lot about how there hasn’t been enough wage growth and argue the pandemic has made people so miserable that some struggling industries need to pay people more. Do you see that as part of the problem? Also, if wages grow, what are the implications in terms of inflation?
jasonfurman jenwieczner Obama economic advisor, AKA someone who helped oversee the slowest possible recovery after the great recession and should be ignored.
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