March's hotter-than-expected Consumer Price Index (CPI) data contrasts with last week's overwhelming jobs report for the same month. As the Federal Reserve works to balance its dual mandate while managing its 2% inflation target, what kind of portrait is this painting of the US economy?
White House Senior Advisor Gene Sperling joins Wealth! to talk about the impact inflation is having on US consumers as the Biden administration works to ease pricing pressures, particularly in energy costs and the housing sector.
"It has always been the case that our number one focus is on overall cost for working families. Of course, inflation has come down significantly from its highs, but it's not good enough for us. We would have liked to see this number come in lower. there's no question about that," Sperling states. "But the way we look at it overall is what is the strain on working families? What can we do? We'd obviously like to see prices come down more. Obviously, the PCE [Personal Consumption Expenditures] that the Fed looks [at] was stronger than this. The last report had that at 2.5% over the previous 12 months and core at 2.8%..."
BRAD SMITH: President Biden commenting on the latest CPI print saying, quote, "fighting inflation remains my top economic priority." He specifically pointed to his plan to lower housing costs and called out corporations for their possible role in keeping prices high. Joining me now on this we've got Gene Sperling, White House Senior Advisor. Gene, thanks so much for hopping on short notice with us and taking some brief time here. I just want to know how within the walls of the White House this report hotter than expected is being discussed and what is being put in place to ultimately continue to combat inflation?
GENE SPERLING: Well, first of all, you know, larger picture, as we've often discussed, we're having an enormously resilient economic recovery. We're just a few days away from having had a 300,000 job number or average of 276,000 jobs that nobody really projected months ago. We've seen unemployment stay below 4% for a historic period that we haven't seen in over 50 years.
But it has always been the case that our number one focus is on overall cost for working families. Of course, inflation has come down significantly from its highs. But it's not good enough for us. We would have liked to see this number come in lower. There's no question about that.
But the way we look at it overall is what is the strain on working families. What can we do? We'd obviously like to see prices come down more. Obviously, the PCE that the Fed looks-- was stronger than this. The last report had that at 2 and 1/2% over the previous 12 years-- 12 months and core at 2.8%. This came in. We would have liked to see this move in the direction. But we have to ask ourselves, what can we do overall for families. I mean, your show has been discussing exactly that there's mixes in prices here.
BRAD SMITH: Well, certainly.
GENE SPERLING: Airfare prices are down. Used cars are down. Dairy was down this month. I think some of the unhappiness which is very understandable for people is that in a place like dairy, milk, and eggs, prices are down but they're still much higher than they're used to so they're not-- they're frustrated by that. I think one good news--
BRAD SMITH: Gene, just to-- just to jump in, the other frustrating part of this too, is one area where a lot of people are wondering what levers can be pulled either by the White House or by the Fed and that's housing and the stickiness in shelter costs right now.
GENE SPERLING: Right. Well, we all know that that lags and there's some debate about owner-occupied [CHUCKLES] rent. You know what-- how important that is. But there's no question this is-- that this is inflation in some of the service areas that we'd like to see moderate. But again, you ask the right question, what can you do about it? And that's why if you look at what the president talks about, not just talks about but does-- Student debt, that's 30 million Americans who are going to have lower student debt. That's money they're saving.
One thing we are happy to see is that even with inflation higher than we'd like, you are seeing real wages up over the last 12 months. So people should know for the average person, their raises are enough to cover inflation and still have a little extra. But again, not good enough.
So what are the areas? Housing prices. The president has called for two million more affordable housing prices, more supply reduces prices. For decades, prescription drug costs has been a main strain on families. Student debt for younger people and for people 30, 40 who still have that debt. The junk fees, the area where the president looks at overdraft fees or late fees for credit cards, all of these come out of your pocket in one way or the other.
So you're right. We have to look at where we have the policy levers and make sure people understand that the president is fighting for lower costs and that there is a dramatic contrast in the legislative agenda, not just in prescription drugs, but in child care, in affordable housing, where virtually everything we're doing is about lowering costs.
BRAD SMITH: Gene, just quickly here because I have to hustle to my finish. We're going to lose the feed here in a hot second. One of the huge things that we've got to think about as well, energy. I mean, this is a massive year. More than half of the world is heading to voting in some form or another and especially here in the US as well. What should the American people be thinking about energy costs, especially as it relates to where the campaigns are going to stack up on foreign policy and where that could be an added exogenous threat in the energy equation?
GENE SPERLING: Well, one of the things the president has tried to do is give Americans more choices to have lower energy costs that are not dependent on everything that happens foreign policy wise. We want people to have the choice between a car fueled by gas, a hybrid, or an electric car. But for those who choose to more electric, what they are essentially doing is saying, their daily gas prices are not going to be dependent on Saudi Arabia, or Russia, or all of the different measures that-- all the different things that can happen in a volatile world market.
So despite what some of the Republicans say, we're not forcing anyone to choose. We want them to have a choice of an American-made car, an American Union-made car that gives us the option to take into our own the ability to have cars that-- have your costs on a day-by-day level certainly have less-- be less dependent on foreign policy things that can move oil and gas prices so significantly.
BRAD SMITH: Gene, thanks so much for hopping on and taking some time here with us today to dive into the March Consumer Price Index Report. Appreciate it.
