Biden’s Labor Secretary isn’t concerned about inflation right now: ‘Steady wage growth is good for workers’

U.S. Transportation Secretary Pete Buttigieg, Labor Secretary Marty Walsh, and Housing and Urban Development Secretary Marcia Fudge speak to members of the press outside the West Wing of the White House after a meeting with President Joe Biden and Vice President Kamala Harris on May 7, 2021 in Washington, DC.
Alex Wong/Getty Images

Despite decade-high price growth, inflation is of little concern, Labor Sec. Marty Walsh said.
The outlook echoes statements from other administration officials playing down inflation fears.
Soaring prices are the byproduct of an economy "still in transition" from lockdown, Walsh added.
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Everyone has an opinion on the general increase in US prices, known as inflation, as the economy reopens. Either it’s spiraling higher or it’s temporary. It could be here to stay, or it’ll be gone in however many months or years or hires.
But Labor Secretary Marty Walsh isn’t worried about it, especially as wages went up yet again in June.
"I think steady wage growth is good for workers. The one thing that we are not concerned about is … inflation," Walsh told Insider. "We’re still in transition, so we’re not concerned about that. So I think anytime we can push for higher wages – and the president’s been very vocal on this – that’s a good thing for people."
The relaxed viewpoint comes despite prices rising at their fastest rate since 2008. Popular measures of nationwide inflation surged through spring as Americans bought more things and widespread shortages left businesses struggling to keep up.
Walsh’s outlook is shared throughout the White House. The "overwhelming consensus" around inflation is that it should "pop up a little bit and then come back down," President Joe Biden said during a June 24 press conference. Treasury Secretary Janet Yellen said in May that, while inflation sits at decade-highs, it should only last "through the end of this year."
"My judgment right now is the recent inflation we’ve seen is temporary. It’s not something that’s endemic," she told lawmakers in a virtual hearing.
Even the Federal Reserve, which operates independently from the executive branch and is tasked with keeping inflation in check, sees price growth swiftly cooling. Fed Chair Jerome Powell has repeatedly characterized the overshoot as "temporary" and driven by the economic reopening. It’s "a heck of a lot easier to create demand" with stimulus than to shore up supply, and "there’s no reason to think" production bottlenecks will last forever, he said in a June 16 press conference.
In a Wednesday note, economists at Goldman Sachs found that supply chain shortages are only a temporary driver. Currently, the economy is full of gaps – used cars, for instance, have been revving up inflation as new cars remain in short supply and consumers clamor to hit the road. But as businesses and supply chains adjust, shortages will become less rampant.
Wages are also on the rise, as employers turn to higher compensation to lure back workers amidst a labor crunch. But even that growth may be transitory, according to a note from a Bank of America research team led by Michelle Meyer. BofA said that in leisure and hospitality there’s a mismatch between demand and supply, citing wages growing 15.1% in leisure and hospitality over three months. However, the passage of time will probably help sort that out, and cool down growth.
There is a benefit to downplaying inflation concerns. Price growth can be a self-fulfilling prophecy. As Americans’ inflation expectations rise, businesses tend to raise selling prices. Workers then demand higher wages, which could spark a cycle of ever-rising prices. A coordinated effort by the Biden administration to keep calm on price growth could put a lid on the public’s inflation expectations.
That hasn’t stopped Republicans from tying rising prices to the president. The GOP has ramped up its critique of the administration’s spending plans, saying the surge in government expenses risks a 1970s-like inflation crisis. But with early signs pointing to cooler price growth in June, that argument could soon fizzle out.
Read the original article on Business Insider

Source: https://www.businessinsider.com/inflation-outlook-rising-prices-marty-walsh-biden-administration-not-concerned-2021-7

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