The Covid-19 pandemic, rather than Joe Biden’s economic policies and stimulus packages, is the “real cause” of high inflation, according to a member of the U.S. President’s Council of Economic Advisers.
In an interview over the weekend, it was put to Heather Boushey that a key criticism against “Bidenomics” and the huge stimulus it had brought, was that it had, to a certain extent, fueled inflation.
Boushey, who was speaking to CNBC’s Charlotte Reed at the Aix-en-Provence economic forum in France, rejected this notion. “What the president did when he first came into office, the American Rescue Plan — we were in the middle of a pandemic, and he put in place a policy that gave us enough flexibility to deal with all the challenges that came our way,” she said.
A $1.9 trillion relief package, the American Rescue Plan was announced in Jan. 2021 and passed by Congress in March of that year.
“Had we done that, and the United States’ inflation spiked higher than anyone else, well, maybe you could make the case that it was about that policy,” Boushey added.
“But the reality is, is that that isn’t what happened — yes, the United States had inflation, but so did other countries that did not have the same policies.”
“So the inflation, the real cause was the global pandemic, and that is about the resiliency of our global supply chains.”
Expanding on her point, Boushey said this was why the U.S. was “making the investments that we need to make.”
The world’s largest economy was also, she added, “encouraging our friends and allies around the world to work with us to foster the resiliency in supply chains that we will need, and to move us away from fossil fuels, which have these volatile prices, towards clean energy.”
The latter scenario would provide “more stable prices over time, where we can get away from some of the disruptions that the global economy can cause for domestic prices.”
Inflation in the U.S. rose at a 4% annual rate in May, according to the Labor Department, its lowest annual rate in over two years. In mid-2022, inflation in the U.S. topped 9% to reach a four-decade high with market commentators noting multiple factors, such as clogged supply chains, outsized demand for goods over services, and trillions of dollars in Covid-related stimulus spending.
Biden’s approval ratings hit an all-time low last year with polls showing Americans were unhappy with the state of the U.S. economy and soaring gas prices.
During her interview with CNBC, Boushey also noted that the inflation rate had “come down for 11 months now” and that the U.S. had also “seen stronger growth than other G7 countries, and we have not seen higher inflation.”
—CNBC’s Jeff Cox contributed to this article.