The current turbulence is unpredictable, Cecilia Rouse, chair of the Council of Economic Advisers said.
Washington, United States:
Expect “choppiness” in the US economic recovery as different sectors bounce back at varying speeds, but inflation will not be a longterm problem, a top White House official said Friday.
Cecilia Rouse, chair of the Council of Economic Advisers, said the current turbulence is unpredictable.
For example, she joked, the government health authority’s ruling on Thursday that vaccinated people can safely drop their coronavirus masks suddenly means “we now anticipate an oversupply of masks and an undersupply of lipstick.”
“In all seriousness, different sectors of the economy will come back online at different times,” she told reporters. “Given the extraordinary and unprecedented circumstances of the pandemic, it will remain difficult for analysts to accurately forecast economic data.”
Rouse said this week’s figures showing a leap in consumer prices, as well as last week’s hugely disappointing employment data, need to be seen in context.
An average of half a million jobs have been created every month since January, she said, while the inflation figures reflected wild, yet temporary swings in economic activity as Americans emerge from partial lockdowns — particularly a return to air travel and buying cars.
“Airline prices ticked up because they had completely cratered last year,” she said.
Those ticket prices still have some way to go to reach pre-pandemic levels — heralding more inflation — but the increases will eventually plateau, as pent-up demand is satiated.
“I do not expect those prices to continue… because at some point people will stop,” she said. “I don’t think people take multiple vacations.”
“There’s going to be some choppiness,” Rouse said.
Runaway inflation, however, is not on the White House’s horizon.
“People fully expect this inflation to be temporary,” Rouse said. “There are not the sort of structural factors that should lead to an inflation that the Federal Reserve cannot control.”
Rouse pointed out that the current recovery was in response to significant gains in taming the Covid-19 pandemic through vaccinations.
However, she cautioned that there is a long way to go, meaning more economic uncertainty.
“We are making fabulous progress in this country, in terms of controlling the virus, but I’d like to remind you that only 58 percent of adults have had one shot at least,” she said. Only a quarter of 18- to 29-year-olds are fully inoculated.
“We are still eight million jobs down from where we were last year. We have a long way to go.”
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