The Covid-19 pandemic, and not Joe Biden’s economic policies and stimulus packages, is the “real cause” of high inflation, according to a member of the US President’s Council of Economic Advisors.
In an interview over the weekend, Heather Boushey was told that a key criticism of ‘bidenomics’ and the huge stimulus it has brought about is that it has fueled inflation to some extent.
Boushey, speaking with CNBC’s Charlotte Reed at the Aix-en-Provence Business Forum in France, dismissed the notion. “What the president did when he took office, the American Rescue Plan — we were in the middle of a pandemic, and he instituted a policy that gave us enough flexibility to handle any challenges that came our way,” she said.
The American Rescue Plan, a $1.9 trillion relief package, was announced in January 2021 and passed by Congress in March of that year.
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“Had we done that and inflation in the United States had skyrocketed than in any other country, then maybe you could argue that that policy was at stake,” Boushey added.
“But the reality is that didn’t happen — yes, the United States had inflation, but so did other countries that didn’t follow the same policies.”
“So the real cause of inflation was the global pandemic, and that’s about the resilience of our global supply chains.”
Boushey deepened her point, saying it’s why the US is “making the investments that we need to make.”
She added that the world’s largest economy also “encourages our friends and allies around the world to work with us to promote the supply chain resilience we will need and move away from fossil fuels that are so… have volatile prices.” towards clean energy.”
The latter scenario would provide for “more stable prices over time, where we can avoid some of the disruptions that the global economy can cause to domestic prices.”
According to the Labor Department, US inflation rose 4% a year in May, the lowest annual rate in over two years. In mid-2022, US inflation topped 9% and hit a four-decade high, with market commentators noting multiple factors including congested supply chains, outsized demand for goods versus services and trillions of dollars in Covid-related stimulus spending.
Biden’s approval ratings hit an all-time low last year as polls showed Americans were unhappy with the state of the US economy and rising gasoline prices.
During her interview with CNBC, Boushey also noted that the inflation rate had “been falling for 11 months” and that the US had also “grown faster than other G7 countries and we hadn’t seen higher inflation”.
—Jeff Cox of CNBC contributed to this article.