US (Washington Insider Magazine)—According to President Joe Biden’s chief economic adviser, The United States has just hit a “significant milestone” in overcoming inflation.
Recently, the Commerce Department revealed data indicating that a closely monitored inflation meter had cooled down. This development is beyond what economists predicted. The prices have dropped monthly for the first time since April 2020.
“We’re closing out the year with inflation on a six-month basis at 2% — the pre-pandemic benchmark,” stated Lael Brainard, the former Federal Reserve vice chair who now chairs the National Economic Council, during a talk with journalists on Friday. “This is a significant milestone. If you think about where we were just a year ago, it is worth reflecting on how much progress has been made.”
Further, She added: “Inflation has come down faster than even the more optimistic forecasts, and that has happened in the context of ongoing solid growth and strong employment.”
Inflation’s continued lowered trajectory on the broader context of vigorous economic development fuels faith that the US economy can reach the proverbial “soft landing” of reining in inflation without substantial job losses, Brainard commented, adding that the “landing strip has widened.”
Brainard stated that wages and wealth have grown. Americans and their economy are better than initially projected. Still, many potential threats could jeopardize that path, she added.
“The economy is resilient, consumers are resilient, the job market is resilient; however, there are risks, of course, to the outlook, and we have to be vigilant to those right now,” she said. “Perhaps geostrategic risks are the most obvious, but we are alert to potential risks, always.”
The ongoing Russian invasion of Ukraine also has continued to affect grain markets. Further, Brainard noted that the administration is staying focused on developments in the Red Sea.
Yemen’s Houthi militants have escalated aggression on commercial ships. It has caused shipping companies to shift vessels from the Suez Canal to around the southern tip of Africa. There are growing worries that inflation and oil prices may increase.
“Those are important shipping lanes, and the president’s national security team is closely watching the situation,” Brainard expressed. “They are in constant communication with ocean shippers, with the industry and other stakeholders, as well as working closely with countries from the region to ensure freedom of navigation and to bolster regional security.”
At this time, the rerouting of container ships is not anticipated to affect the availability of products significantly, she stated.
Individually, on the topic of US Steel’s plans to be developed by Japan’s Nippon Steel, Brainard repeated comments by her and others in the Biden administration that the deal would confront “scrutiny.”
“Because of the national security and critical supply chain importance of the steel sector, deals such as this one deserve serious scrutiny,” she said. “We also say that we welcome investment from around the world, and of course, we’ve seen record foreign direct investment into the US to participate in this great manufacturing revival that we’re seeing.”
On the other hand, Wall Street is observing as the Federal Reserve indicates it’s preparing to reduce interest rates, possibly as soon as March. The Dow Jones Industrial Average catapulted above the 37,000 level for the first time.
The reporters also asked her about the White House’s assertion of the record highs for the Dow. Brainard pointed out that investors are coming to the Biden administration’s optimistic outlook.
“Market participants are reflecting a much more positive view about what the economy will likely look like over the next year. And we welcome that,” Brainard said, noting that market interest rates have dropped and mortgage rates have eased. Still, Brainard realized the job was not done.
“We have a lot of work to do,” she said. “In certain areas, Americans continue to see really challenging affordability.”