ICYMI: NEC Director Lael Brainard: U.S. Economy is “Defying Predictions”

On Wednesday, National Economic Council Director Lael Brainard delivered remarks at the Economic Club of New York on Bidenomics and how our economy is “defying predictions.” The remarks followed new data yesterday showing that inflation has fallen for 12 straight months to 3%—the lowest it’s been in over 2 years—while “core inflation is also declining.”

As Director Brainard put it:

• “The economy is defying predictions that inflation would not fall absent significant job destruction.”
• “Despite repeated forecasts that recession is just around the corner, the U.S. recovery is solid.” 

Inflation has fallen against the backdrop of a historic labor market recovery. Unemployment has been below 4% for the longest stretch in 50 years, the share of working-age Americans with a job is at the highest level in 20 years, and real wages are higher than they were before the pandemic. In short, “the labor market is now in much better balance.”

See coverage below:

MSNBC: Katy Tur Reports
TUR: Let’s first show the numbers about where the prices stand and how things have fallen. You’ll see that everyday grocery prices are down, gallon of milk is down, dozen eggs is down. Chicken and loaf of bread are up slightly, but not by very much. And gas has fallen quite a bit. What is behind this deescalating series of events?

BRAINARD: We see inflation now at 3%, as you said, down every month for 12 months, and that means that Americans are starting to really be able to see that at the grocery store, just as you said. I think what is behind it is an economy that is stabilizing at a good, steady rate of growth. We are seeing the supply side of the economy finally normalizing and, as a result, real earnings for Americans are going up. And that’s all happening against the backdrop of a very robust job market that has a lot of Americans back in jobs and back in the workforce.

TUR: The President will say that Bidenomics is part of what’s responsible for this, and the Inflation Reduction Act, all the bills that he was able to get through Congress. Can you definitively say that those have filtered down into the economy this quickly?

BRAINARD: Absolutely. You can already see we have $500 billion worth of private-sector investment in areas like clean energy and semiconductors. We’re seeing tens of thousands of infrastructure projects all around the country. And if you look at the job market, what has been really notable over the last six months or so is that we’ve seen the labor market coming back into really good balance. People rejoining the labor force at a pace that many people predicted they wouldn’t, even a year ago, so we now have more Americans in jobs than has been true in 20 years, and that’s taking place against the backdrop of a moderating labor market.

CNN: The US economy is defying expectations, says Biden’s top economic adviser
[Nicole Goodkind, 7/12/23]
The resiliency of the US economy is defying expectations — and the odds of a “soft landing” are improving, said Lael Brainard, President Joe Biden’s top economic adviser, on Wednesday afternoon. New data from the Labor Department released earlier in the day showed that inflation rose last month by 3%, its slowest pace since March 2021. The news pushed markets higher, and Biden touted it as “Bidenomics in action.”

CNN: US inflation cooled in June for the 12^th straight month
[Alicia Wallace, 7/12/23]
June’s CPI reading is just a touch above the 2.9% average level of inflation seen in the two decades prior to the global financial crisis, according to Lael Brainard, director of the National Economic Council. “The economy is defying predictions that inflation would not fall absent significant job destruction,” Brainard said Wednesday in prepared remarks at the Economic Club of New York. In June, the US economy added 209,000 jobs and the unemployment rate was 3.6%, the BLS reported last week. The monthly job gains represent a significant slowing from the breakneck pace of employment growth seen during the recovery from the pandemic; however, the current labor market is outpacing what was seen in and prior to February 2020.

New York Times: Inflation Cools Sharply in June, Good News for Consumers and the Fed
[Jeanna Smialek, 7/12/23]
“The economy is defying predictions that inflation would not fall absent significant job destruction,” Lael Brainard, the director of the National Economic Council, said during a speech on Wednesday. “This economy is delivering strong results for America’s middle class.”

New York Times: Biden Touts Easing Inflation as ‘Bidenomics in Action’
[Alan Rappeport, 7/12/23]
In a speech at the Economic Club of New York on Wednesday, Lael Brainard, the director of the National Economic Council, said that the United States economy was outperforming other advanced nations. She said that inflation in the U.S. was now the lowest among the Group of 7 countries while its recovery from the pandemic has been the strongest. “The economy is defying predictions that inflation would not fall absent significant job destruction,” Ms. Brainard said, according to her prepared remarks.

Reuters: White House economic official Brainard: inflation on moderating path
[Ann Saphir, 7/12/23]
National Economic Council Director Lael Brainard on Wednesday said the latest U.S. economic data shows that upward price pressures can and are receding without a surge in unemployment that many had feared. “The economy is defying predictions that inflation wouldn’t fall absent significant job destruction,” Brainard said at an event held by the Economic Club of New York. “Just today we saw new and encouraging evidence that the economy is on the path to moderate inflation accompanied by a resilient jobs market. Repeated predictions of a US recession have not come to pass either, Brainard said, noting that the 3% year-over-year increase in consumer prices last month, reported earlier Wednesday, is in line with pre-pandemic norms, even as the unemployment rate has stayed low.
Bloomberg: Brainard Sees ‘Solid’ US Recovery, Downplays Recession Risks
[Jordan Fabian, 7/12/23] 
President Joe Biden’s top economic adviser said US inflation is trending toward lower levels and downplayed chances of a recession hitting the US economy. “Just today, we saw new and encouraging evidence that the economy is on the path to moderate inflation accompanied by a resilient jobs market,” Brainard said. The former Federal Reserve board member took a shot at economists who said fighting inflation would crush the jobs market, saying “the economy is defying predictions that inflation wouldn’t fall absent significant job destruction.” Brainard’s speech comes hours after the White House received welcome news that US inflation hit a two-year low. Republicans have criticized spending legislation Biden has championed for fueling price increases, so the new data provides the president with fresh material to rebut those arguments.

NPR: Why inflation is losing its punch — and why things could get even better
[Scott Horsley, 7/12/2023]
Companies may no longer be able to pad their profits. Economist Lael Brainard says some companies added to their profit margins during the last two years of strong inflation — a trend that could soon be reversed. “It will be important for corporations to continue to bring their markups down after having raised them to unusually elevated levels over the past two years,” Brainard told the Economic Club of New York Wednesday. Brainard says those higher markups “should unwind if consumers are more price-sensitive and firms have to compete more intensely.”

Axios: Biden’s blockbuster week
[Zachary Basu, 7/12/23]
What they’re saying: “Good jobs and lower costs: That’s Bidenomics in action,” Biden said in a statement today, taking a victory lap two weeks after the administration launched its newly branded economic pitch. Lael Brainard, director of the National Economic Council, said in a speech in New York today that the U.S. has the both lowest inflation rate and the strongest pandemic recovery among all G7 nations. “The economy is defying predictions that inflation would not fall absent significant job destruction,” Brainard declared. 

MarketWatch: U.S. recovery ‘solid,’ says White House’s Brainard, as inflation slows
[Robert Schroeder, 7/12/23]
The U.S. economy is in a “solid” recovery, top White House economist Lael Brainard said Wednesday, hours after new data showed inflation continuing to cool. Speaking at an Economic Club of New York event, National Economic Council Director Brainard said there’s “encouraging evidence that the economy is on the path to moderate inflation accompanied by resilient jobs market.” Brainard spoke after the release of data showing inflation easing in June, which President Joe Biden also touted in a statement. As MarketWatch reported, U.S. consumer prices rose a modest 0.2% in June, and the rate of inflation slowed to the lowest level since 2021. Biden in his statement credited some of his own policies, and said: “I will continue to fight for lower costs for families every day.

Barron’s: Brainard Takes Aim at Trickle-Down Economics
[Megan Leonhardt, 7/12/2023]
The benefits of so-called “trickle-down” economics are overrated, at least according to President Biden’s top economic adviser. Lael Brainard, director of the National Economic Council, said Wednesday that the strategy of tax cuts for wealthy investors and large corporations doesn’t work to lift up an overall economy. […] Under trickle-down economics, Brainard said economic inequality in the U.S. increased and vital investments in infrastructure and industries stagnated. Brainard used her speech to trumpet what she called the successes of President Biden’s deliberate strategy of focusing on growing the economy from the “middle out” and “bottom up”—rather than what she described as a flawed top-down economic theory.

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