US President Joe Biden’s top economic adviser on Monday said that the US might see some difficulties as it contends with elevated inflation and further supply chain challenges stemming from COVID-19 lockdowns in China and the Russian invasion of Ukraine.
“We are facing a lot of uncertainty, we are facing rocky waters right now,” US National Economic Council Director Brian Deese said on Bloomberg Television’s Balance of Power with David Westin.
At the same time, “the United States is probably better positioned than any other major economy to navigate effectively through them,” he said.
Photo: EPA-EFE
Deese refrained from offering any estimate of the chance of a recession in the US, while saying that risks of a downturn are more elevated in other economies.
He pointed to a strong US labor market — unemployment last month dropped to 3.6 percent, practically its pre-pandemic level — along with strong household balance sheets and consumption.
While the consumer price index, due yesterday, would show an “elevated print” for last month, Deese said that inflation should be lower by the end of this year.
The Biden administration has worked to improve the processing of containers at key ports — a key bottleneck in the supply chain during the pandemic — and released petroleum reserves to combat surging gasoline prices, Deese said.
If the Biden administration can move forward with those efforts, “we will see inflationary pressures moderate. They will be lower than they are today at the end of this year and lower still in the coming year,” Deese said. “That’s our focus and that’s our hope.”
He also said that US officials are “closely” monitoring the situation in Shanghai, where a surge in COVID-19 cases has triggered lockdowns that threaten renewed supply chain complications.
Economists surveyed by Bloomberg see US inflation easing to 5.7 percent in the final three months of this year, according to the median forecast. That is down from an estimated 8.4 percent annual pace for last month.
The survey also showed that the chance of a recession over the next year increased to 27.5 percent, from 20 percent in a survey last month.
Austan Goolsbee, chairman of the Council of Economic Advisers under former US president Barack Obama, said of recession chances that it was not wrong “to say that it’s elevated risk,” speaking on Bloomberg TV.
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