White House’s Rouse on GDP, Inflation and Tapping SPR

By | October 27, 2022

Council of Economic Advisers Chair Cecilia Rouse discusses the US GDP report, inflation risks and President Joe Biden’s decision to tap the Strategic Petroleum Reserve with David Westin on ”Balance of Power.”


I I guess I really want to know what did You want these numbers to be because I Know you want the economy to grow at the Same time you got to get your arms Around inflation are these good numbers Bad numbers okay numbers Well absolutely what we learned today is That the Commerce Department estimates That in the third quarter GDP grew about 2.6 percent so that suggests that there Is resilience there is strength in this Economy even as the FED begins to you Know the FED is going through a Tightening cycle to to tame inflation so If we were to get under the hood what we Saw is that there is continued Resilience in consumer spending but it Did ease so that is consistent with what The FED is trying to do we also so that Saw that businesses continue to invest But again that is slowing as the FED as We would hope the big drag on the GDP Last quarter was in housing investment Again that’s the sector that we would Think would be most sensitive and Susceptible to the terrain increases the Big win or the big the big wind in the Growth of the GDP came from net export You know we’ll see how that gets revised But overall what this report tells us is That the economy remains robust it Remains resilient even as we’re starting To see the kinds of cooling that I Believe the FED is looking for well and

That’s my question can you have this Robusta growth and get your arms around In place at the same time because a lot Of people are very concerned as you know About inflation Yeah absolutely so we also got Unemployment insurance claims today that They remain low as well suggesting that Our labor market remains quite low this Isn’t this is an unusual economy and we Are we haven’t had inflation in decades But we also haven’t had this kind of Economic crisis so I I believe we have To follow the data and and we obviously Try to look around corners but these Data suggest to me that we are seeing The kinds of cooling that uh that we Would expect to be seeing as the FED Increases interest rates you know we Will see what happens going forward we Know that the global economy is fragile And but we also know that the US economy Is resilient and we remain optimistic That there’s a path by which the FED Contain inflation without generating too Much pain in the overall economy not for Us perhaps an unfair question but we Hear from you we hear from your Colleagues otherwise we certainly hear From President Biden all the time about The various steps being taken to make Sure we have a lot of employment the Employment clearly is doing very very Well and also that we try to address

Some prices prescription drug prices Things like that and yet if you look at Polls a lot of Americans don’t have Complete confidence in your management Of the economy is that because they Don’t understand what you’re doing they Haven’t gotten the message or is a Question about your policies Well look I I believe these policies Underwrote us getting through to where We are today on the pandemic it put Shots into arms it gives households and Businesses resources to get through the Pandemic the three signature let pieces Of legislation that invest in our Physical infrastructure roads and Bridges the bipartisan infrastructure Bill the chips bill which has is Investing in critical manufacturing here In the United States in fact Micron is Announcing a hundred billion dollar Investment over 20 years to make Semiconductors here in the United States And that’s happening almost every week Here in the United States due to the Chips Bill and most recently the Inflation reduction act which makes the Historic investments in the transition To clean energy which we know we have to Make also addresses key costs in Prescription drugs and health insurance So those are the kinds of Investments That actually increase economic capacity Allows our economy to grow which allows

For us to absorb these kinds of shocks Without generating inflation so we Understand though that inflation is too High the president gets it he’s been Working to get price gas prices down so As a result they’ve been coming down for The last three weeks or so but we Understand that that’s partially due to The war on your train and we need to Keep oil on the market so we get it it’s Inflation is too high but the President’s policies have been uh really Are have been important for maintaining The health of the American economy Doctor as you mentioned the the Micron Plan in Upstate New York we actually had A governor hokel on last week to talk About that I believe the president is up There this afternoon to address that Issue sort of north of Syracuse a major Investment and goodness knows we’ve had A shortage of chips although that seems To be turning around now increasingly We’re hearing from ship manufacturers Actually demand is going down and it Raises questions at least for me about I Will call it industrial policy are there Risks in the government getting involved In things like making sure we have more Capacity conductors because those things Can go up and down Absolutely so we understand we have to Separate out the cyclical demand uh from What is more of a longer term Trend but

What we know is these kinds of Semiconductors are getting used in more And more components they’re getting used In components that are important to our National Defense and therefore there’s a National security element uh this is not About the U.S completely cornering the Market on semiconductors but we know we Need to have more capacity here at home Because we know that there are critical Input to so many Goods that we all rely On so we understand that the government You know picking winners and choosers is Not winners and losers is not always Going to get it right heck the private Sector doesn’t always get it right but What we do know is that when it comes to Ensuring and billing in resilience Ensuring that we’re building uh the Kinds of inputs maybe whether it be the Transition the clean energy and solar Panels or the semiconductor chips which Are so sensitive to so many components That we all rely on we need to be making Some here at home they bring good jobs It brings economic activity it’s an Engine of economic growth and by Ensuring that many people workers can Participate and benefit we ensure that Those that those that growth is more Widely shared I’m shocked to hear you Suggest the private sector doesn’t Always get it right when the banks Investments that’s that’s really

Shocking news let me one more if I could On energy because you you’ve released Some more from the Strategic petroleum Reserve the president said he might Release even yet more are you pretty Much tapped out on that now and what is The longer term plan for energy policy And of course a lot of is driven to be Sure by Russia invading Ukraine but for Whatever reason we got a problem So the president wants to use our Strategic petroleum Reserve responsibly We’ve got about 400 million barrels that Remain in it uh but he and he wants he Recognizes we need to retain it for the Next unforeseen shock uh but we also Want to ensure that there was oil on the Market he is working with our allies Around the world uh to consider Opportunities and possibilities for a Coordinated release or whether or how we Might structure that but importantly he Will use whatever decision he makes will Be using the street the Strategic Petroleum Reserve in a responsible Fashion

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