President Joe Biden’s top economic adviser said that the U.S. may see some difficulties as it contends with elevated inflation and further supply-chain challenges stemming from COVID lockdowns in China and the Russian invasion of Ukraine.
“We are facing a lot of uncertainty, we are facing rocky waters right now,” the director of Biden’s National Economic Council, 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.
Deese refrained from offering any estimate of the chance of a recession in the U.S., while saying that risks of a downturn are more elevated in other economies.
He pointed to a strong U.S. labor market — unemployment last month dropped to 3.6%, practically its pre-pandemic level — along with strong household balance sheets and consumption.
‘Elevated’ Inflation
While the consumer price index, due on Tuesday, will show an “elevated print” for March, 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 noted.
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 U.S. officials are “closely” monitoring the situation in Shanghai, where a surge in COVID cases has triggered lockdowns that threaten renewed supply-chain complications.
Economists surveyed by Bloomberg see U.S. inflation easing to 5.7% in the final three months of this year, according to the median forecast. That’s down from an estimated 8.4% annual pace for March.
The survey also showed that the chance of a recession over the next year increased to 27.5%, from 20% in a March survey.
Austan Goolsbee, chairman of the Council of Economic Advisers under former President Barack Obama, said of recession chances that it wasn’t wrong “to say that it’s elevated risk,” speaking on Bloomberg TV.
