Transcript: Jason Furman on “Face the Nation”, May 22, 2022

The following is a transcript of an interview with Jason Furman, former chairman of the White House Council of Economic Advisers, which aired on “Face the Nation” on Sunday, May 22, 2022.


MARGARET BRENNAN: Jason Furman is joining us now. He chaired the Council of Economic Advisers under former President Obama, and he joins us today from Davos, Switzerland. Welcome back to FACE THE NATION. You know, it’s been a really rough week for the markets. The Treasury Secretary scared people when she started talking about high energy prices, high food prices that are slowing the economy. Ben Bernanke, the former Fed chairman, also used the word stagflation. What do US consumers need to understand that is going on?

JASON FURMAN: Look, I would put some perspective on what we’re going through right now. The market is not the same as the economy. If you look at the economy, you see an unemployment rate of 3.6%, you see 500,000 jobs being created per month, and you see pretty strong consumer spending. So a lot of good things are happening there. But the market is sending out a signal and it’s one that we should be a little concerned about and pay attention to, but no time to panic.

MARGARET BRENNAN: But the Treasury Secretary also sent a signal by acknowledging that this could weigh on consumers, which would offset the positive data points you just mentioned there. Looking at it this way, what is the probability of a recession?

FURMAN: Look, we’ve seen something remarkable. Consumers, if you examine them, are very pessimistic and negative about the economy. When they voted with their wallets, we saw that we had the consumer spending data for April and it was way up. Consumer spending on just about everything is booming. In the next 6 to 12 months, I am not very concerned about a recession. After that, I start to worry, because that’s where the Fed’s policy will be more effective.

MARGARET BRENNAN: So, you know, we’re talking and talking about inflation in this program. It is, of course, the job of the central bankers, the Fed, as you just mentioned there, to act, to control it. But politically, there is a price. As you know, Democrats are pushing bills in Congress, which Congressman Jeffries just talked about, in an effort to limit what they call price gouging. You hear President Biden use that phrase, also talking about raising taxes on the rich. As an economist, do any of these have a measurable impact for consumers in fighting inflation?

FURMAN: Look, look, like you said, most of the job of fighting inflation is with the Fed. There’s a little bit the president can do. He has made some good strides, be it opening ports, getting more truck drivers on the road, releasing oil from the Strategic Petroleum Reserve. I would like him to do more like lower tariffs on China introduced there by President Bush. However, I don’t think these anti-bump-up laws would do much to bring inflation down. They only magnify the kind of shortages that consumers are likely to hate even more than the high prices.

MARGARET BRENNAN: You were quoted as saying that corporate greed is a bad theory of inflation. Is that another way of saying that what the Democrats are talking about is just a gimmick?

FURMAN: I think it’s kind of a gimmick, those price-increasing bills, because, you know, he’s got a lot of extra demand. What happens if demand rises? Prices are going up. There is an old saying that the cure for high prices is high prices. That’s a little painful to deal with, but it’s what triggers the extra offering. It’s bringing more producers to market, and it’s what drives prices down and we have to make that process work. Trying to interfere with it will only make it worse. We tried that in the 1970s, it was a big failure. We don’t have to repeat it again.

MARGARET BRENNAN: You said you think the president should act to lower inflation, at least in part by lifting trade tariffs on China. Those are the Trump-era trade tariffs. But you know, there’s disagreement within the administration about doing that because they like the leverage here for consumers. How are they supposed to understand exactly how much of the inflation they are experiencing is due to this struggle?

FURMAN: It’s just a small part of it. I bet maybe a quarter to a half point inflation. That’s less than an inflation rate of 8%. So it’s not huge. I just think that if you’re the president and you’ve rightfully made inflation your number one priority, you don’t want to leave a stone unturned. And this is one of the bigger tools he has. It is not without controversy, but in terms of jobs, there are currently record vacancies. Now is about a good time to take such a step as I can imagine, because the lighting is needed for consumers. Everything you can do is worth it.

MARGARET BRENNAN: It seems that the Secretary of the Treasury agrees with you on that. In the bigger picture, we hear a lot of blame on the campaign trail about where inflation came from. And, you know, there’s an argument that this is 20 years of spending and, you know, it’s all added up plus all the geopolitical stuff that’s going on. How do you handle that for someone watching at home? How much do Democrats actually owe for continuing to pump up spending in the pandemic era at a time when the economy was already recovering last spring?

FURMAN: Look, in March 2021, the president signed the US bailout plan. That’s one of the reasons the United States has had a faster recovery than any other economy. But it’s also one of the reasons why we have incredibly high inflation. I wished he did something smaller at the time. I think it was bigger than needed. But it’s good that something happened. After that, the Fed made some mistakes. It was behind the curve for most of last year. It continued to think that inflation was transient. It did not move to normalize rates. And now you come to President Putin’s invasion of Ukraine. And that’s the icing on the cake of this terrible concoction we already had.

MARGARET BRENNAN: Yes, it’s quite a picture. Jason, thank you for your analysis and for joining us today. We will be right back.

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