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Obama economist Jason Furman says inflation is NOT in a sustainable place

Another Obama-era economic adviser warned of inflation figures after May data showed the consumer price index rose 8.6 percent to its 41-year high.

The new numbers beat expectations and dashed any hopes that consumer price hikes had peaked. Gas prices, meanwhile, average $4.98 a gallon, according to AAA, much more than double what they were when President Biden took office.

“Look, now, you know, if you slow down the economy, you slow down price growth and you slow down wage growth. I don’t have an obvious answer for which one slows down more than the other,” Obama’s top economist Jason Furman said Friday morning on CNBC.

“Right now we are in a bad situation where we have much more price inflation than wage inflation.”

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“Maybe the economy is slow, maybe prices are slower than wages. I just don’t know which one of those slows down more, so maybe we’re helping people. But we’re not in a sustainable place right now,” he said.

New data released Friday suggested the Federal Reserve could continue its rapid rate hikes to fight inflation, and markets reacted quickly, with the Dow losing more than 700 points in early trading.

The Labor Department report found that the consumer price index rose 1 percent in May from the previous month, up 8.6 percent in 12 months.

The annual increase, driven by rising food and energy prices, was higher than economists had expected, surpassing the recent 8.5 percent peak reached in March, reaching levels not seen since December 1981.

Food prices have also risen rapidly, impacted by rising raw materials in the wake of the Russian invasion of Ukraine. Groceries rose 11.9 percent last month, while eating away from home rose 7.4 percent.

Prices for services such as rent, hotel accommodation and air travel were also high last month.

It was also the strongest signal yet that inflation has not yet peaked, as Biden claimed back in December.

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Meanwhile, the Biden administration has come under criticism from all quarters for price hikes, especially from Obama and Clinton-era advisers.

Obama economist Stephen Rattner blamed the federal government under Biden and the Congressional Democrats for “putting too much money in the people’s pockets.”

“We’re all paying the price for over-stimulating this economy during the pandemic and putting too much money in people’s pockets, which has created a lot of this inflation,” Rattner said on MSNBC’s Morning Joe Wednesday.

“There’s no free lunch here, now we all have to pay the price.”

Clinton Treasury Sec. Larry Summers said the Fed needs to do some soul-searching for its own failed inflation calls after delaying rate hikes.

On Tuesday Treasury Sec. Janet Yellen said the US is facing “unacceptable levels” of inflation after admitting last week she was “wrong” about how long price increases would last.

“I expect inflation to remain high, although I very much hope it will fall now,” she told a congressional panel. The Fed aims to keep inflation at 2 percent per year.

“To dampen inflationary pressures without undermining the strength of the labor market, an appropriate fiscal stance is needed to complement the Federal Reserve’s monetary policy measures,” Yellen said at Tuesday’s hearing.

Biden, Yellen and Federal Reserve Chairman Jerome Powell promised for months last year that inflation would be “transient.”

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Inflation was higher than economists had expected in May, reaching the recent peak of 8.5 percent in March

Inflation was higher than economists had expected in May, reaching the recent peak of 8.5 percent in March

Gasoline prices hit another all-time high on Thursday, averaging $4.97 a gallon

Gasoline prices hit another all-time high on Thursday, averaging $4.97 a gallon

Yellen said on Tuesday: “When I insisted that inflation would be transient, I did not envision a scenario where we would end up with multiple variants of Covid disrupting our economy and global supply chain, and I saw no impact on food and energy prices that we have seen from the Russian invasion of Ukraine. So Mr. Powell indicated that we both probably could have used a better term than temporary.’

During the hearing, Yellen challenged Republicans’ concerns that inflation could have been exacerbated by the $1.9 trillion US bailout plan passed by Democrats in 2021.

sen. Steve Daines asked Yellen if she agreed with the San Francisco Federal Reserve Bank’s assessment that the US bailout had a “significant causal effect” on inflation.

“We are seeing high inflation in almost all developed countries around the world. And they have a very different tax policy,” Yellen says. “So it can’t be the case that most of the inflation we’re experiencing reflects the impact of the ARP.”

Yellen went on to explain that Biden “inherited an economy with very high unemployment.”

“We had to address the possibility that this could be a downturn that could rival the Great Recession,” the secretary said, explaining the need for the massive stimulus package.

As inflation remains a dead weight to the president’s popularity, he said last week it’s unlikely he will be able to turn a knob and curb inflation or end record prices for the president. gas.

“A lot is happening now. But the idea that we can click a button and lower the price of gas is not likely in the short term. Not even when it comes to food,” he said.

“As far as I know, we can’t take immediate action to figure out how to bring gas prices down to $3 a gallon. And we can’t do that right away with regard to food prices either,” he said.

Biden cited the war in Ukraine, which has bottled the country’s wheat exports.

Meanwhile, as many as 8 in 10 Americans are dissatisfied with Biden’s economy.

A combined 83 percent of Americans now say the state of the economy is bad or not so good, according to a new Wall Street Journal-NORC poll released Monday.

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