Episode summary
NEC Director Kevin Hassett: Price increases are decelerating and wage increases are accelerating
Summary
Kevin Hassett argued that the latest CPI reading was more of a temporary blip than a true reversal, even though the top-line and core numbers both ticked up. He said the 12-month move was still modest, but the near-term data looked less benign than the prior three months, when inflation seemed under control. He pointed to falling beef and egg prices as signs that some of the White House’s efforts are showing up in the data.
He also framed the stronger parts of the report as evidence of a healthy economy rather than an inflation problem. Hassett said shelter costs were being driven by discretionary travel and higher spending on hotels and resorts, which he treated as a sign that consumers feel good and have the money to spend. He tied that to what he called almost 4% GDP growth and said wage gains are now accelerating faster than prices.
On the Fed, Hassett declined to criticize policy directly and said the White House respects the central bank’s independence. He said the Fed should pay attention to demand created by real wage growth, but he did not argue for a specific policy response. He also said credit and AI debt risks are being monitored closely, but not at panic levels.
Key takeaways
- Hassett said the CPI uptick looked like a possible blip, not a clear break from the disinflation trend.
- He highlighted falling beef and egg prices as evidence that some inflation pressures are easing.
- He said shelter inflation is being driven by discretionary travel and luxury spending, which he views as a sign of strong demand.
- Hassett argued that price increases are decelerating while wage increases are accelerating, helped by capital spending.
- He said the White House is watching credit and AI debt risks closely, but does not see a panic signal right now.
Notable quotes
“THE BIG STORY, THE REALLY BIG STORY IS THIS CPI WAS SHELTER”
“THE FUTURE IS VERY BRIGHT, ESPECIALLY IF YOU CONSIDER THAT WE'RE NOT ONLY TALKING ABOUT PRICES, BUT TALKING ABOUT WAGES”
“PRICE INCREASES ARE DECELERATING, AND THE WAGE INCREASES ARE ACCELERATING, ACCELERATING BECAUSE OF ALL THE CAPITAL SPENDING”
“THERE ARE REASONS TO PAY ATTENTION TO THE MATTER, BUT NOT REASONS, CERTAINLY FOR FOR PANIC RIGHT NOW”
How the episode opens
Inflation concerns back in folk. Well, it never really went out of focus, I guess. Joining us now from the white house, national economic council director Kevin Hassett.
Kevin good good to see you this morning. Thanks for joining us. Last week we got some readings.
And I know you've already commented on some other outlets about them. Disappointed in the top line cpi number. You're able to to see the continuation though.
If you go into the details devil's in the details right. Tell us what you see. That continued some of the some of the things in, in the prior two months where it looked like some of the components were starting to to behave a little bit better.
Which one?
Right. Well, this is either a sort of break from the downtrend or a blip. You know, it's the problem with looking at these high frequency data.
We'll know for sure in a month. But the bottom line is if you look at the 12 month change, it was top line went from 3.5 expectation to 3.6. The 12 month core change went from 2.5 to 2.6, which is kind of like a snoozer.
The reason why it wasn't quite as much of a snoozer as usual is that we've more and more been looking at near-term numbers, and if you look at the previous three months, it looked like inflation was completely under control, and now it looks like it's sort of back needing some work. And so the one thing that I found gratifying about it was that the stuff that we've been working so hard on, you're really starting to see in the data. So for example, for the fourth month in a row, beef prices went down, egg prices are down.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation deceleration
- wage growth
- fed interest rate outlook
- midterm elections
- economic outlook
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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