In the Bubble with Andy Slavitt: Our Shot

How Inflation Plays Out in the Next Year (with Jason Furman)

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What do gasoline, eggs, used cars, and meat have in common? Inflation has caused the prices on all these items to increase by double digits in the last year. Andy dives into what’s happening with inflation with Jason Furman, Harvard economist and former Chair of the Council of Economic Advisors under President Obama. They discuss why it’s happening, what can be done to tackle these high prices, and where he thinks the economy will be in a year. Plus, how all of this ties into why so many of your Christmas gifts are backordered.

Keep up with Andy on Twitter @ASlavitt and Instagram @andyslavitt.

Follow Jason @jasonfurman on Twitter.

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Andy Slavitt, Jason Furman

Andy Slavitt  00:02

Welcome to IN THE BUBBLE. This is Andy Slavitt, your host. Welcome. Good to talk with you again. You just heard from our guest today, Jason Furman. Jason Furman is an economist. He was Barack Obama’s Chair of the Council of Economic Advisers. In his second term, I served with Jason, he is one of the best economists out there. We’ll talk about what we’re gonna talk about with Jason in a second. But I want to get to some other news first, money news of a different type. We at in the bubble, as you may know, donate all the proceeds that come to your host, to causes of people that are helping people out during the pandemic, we have found yet another one today that we’re going to make a donation to called Invisible Hands Deliver. And we’re donating $12,341.57 Why it’s so precise. Got me $12,341.57, to organization called Invisible Hands Deliver. This is a donation that you have all made possible. So thank you. Here’s how they describe themselves. We’re a nonprofit group of organizers and volunteers delivering groceries, prescriptions and other necessities to those most vulnerable during COVID, as well as elderly, immunocompromised, sick, and people with disabilities. First of all, if anybody knows this organization, tell them we just made this donation because it’s a surprise, we just announced it, we’ll obviously send them a check. But if you feel like texting them or tweeting them or do something thing, hey, I just heard you got a donation, that’d be kind of a fun thing to do.

Andy Slavitt  02:48

Also know that if you go back and add it up, since we began the show in April of 2020, we’ve now given away a $167,000. Thanks to you. So by listening to this show, you not only are listening to the show, but you also are part of a contribution of $167,000 we’ve been making to various causes like Invisible Hands Deliver. And other ones, you go back and listen to some of what they are, we’ll be even put it up on our show notes for if you want to see. So thank you, you’re doing a great thing. You’re doing a great thing by putting up with me, it does pay doesn’t pay you but it pays somebody. So I want to talk about the show for a second. We went and asked you a little while back to tell us what you wanted to hear on the show. And here’s part of the response that we got was, first of all, this pandemic, COVID 19 is gonna be with us, it’s gonna be with us for a while, it’s gonna be worth talking about for a while. So number one, we’re committed to continuing to bring you the kind of content we’ve been bringing you with people like Trevor Bedford, oh my god, that episode was crazy, amazing. Hugh Hewitt, Tony Fauci, others, that don’t go anywhere. We also asked what other things you want to hear from us. And here’s what you said. Number one, insider conversations. So Andy, bring the people that you know that you can get to come on the show and hear the stuff that goes on behind closed doors. We don’t get to hear anywhere else. In other words, bring us in the bubble. Okay, got that.

Andy Slavitt  04:24

Number two, plain facts just explain stuff to us. Get people to explain stuff in common English that are just keep us informed and helpful. Number three, focus on topics that are kind of overwhelming and even a little bit scary that you can kind of dissect for us, like climate change, like you know, the social media, misinformation craziness. Those types of things which people feel are consistent with what IN THE BUBBLE does during the pandemic. So the show we have for you today is very much in that vein listening to you. We’ve put together what we think the very best insider guest with the topic that is, I think, require some plain facts, and can be a bit overwhelming, because it’s kind of thing you feel like you can’t do much about and that topic is inflation. Prices are going up on you. Everywhere, it seems like, again, what have I done to deserve this? Like the pandemic? I can’t control this? Where’s it from? Why is it happening? When’s it gonna stop? What should I be doing about it? Those are all the right questions. And, you know, when oppose him to Jason Furman. And you know, he’s a straight shooter, I think you’ll see, like, what I hope is that this is like different that you’d get, if you’d want to read about it in a magazine or listen to it on NPR, or whatever. This is straight into your ears, on your treadmill or whatever, in your car. Or I don’t know the lullaby you’re playing for your baby, please don’t play my voice for your baby. Bad idea. And it is just someone who’s given you the inside straight scoop on what’s going on and what it means. So hopefully, you’ll give us feedback. Hopefully, you’ll listen to this. Hopefully you like it. Hopefully, it’s kind of thing that we’ll continue to do and mix it into our other coverage. So let us know what you think. And let me bring on Jason Furman, again, Jason is the former chair of the Council of Economic Advisers during Obama’s second term. He is at the Harvard Kennedy School, where he teaches on economic policy at the Department of Economics at Harvard. Okay, here goes.

Andy Slavitt  06:54

Hey, Jason,

Jason Furman 

Hey, Andy.

Andy Slavitt 

How you’ve been, man?

Jason Furman 

I’ve been good. I’ve been good.

Andy Slavitt 

Good. Well, thanks for joining. We’re gonna have a fun conversation where you explained to us what the heck’s going on with this inflation thing? In the economy right now? I think it’s not a feeling people are used to with a very smart audience. It’s an audience that’s, you know, it’s a general audience. And it’s not the kind of thing that many people in their lifetimes, or their memories have had to think about for a long time. So just start by giving us a sense, Jason, of what’s going on?

Jason Furman 

Yeah, inflation is the average increase in prices. And on average, prices have increased more than 6% in the last 12 months. That’s very unusual, because normally inflation is only about 2%, every 12 months. In fact, we haven’t had a year like this for the last 30 years.

Andy Slavitt 

Why is it happening?

Jason Furman 

Well, that’s a much longer question than your last one. No, it’s, I think, by and large explainable by three factors. The first is demand, the second is supply. And the third is just global. In terms of demand, Americans are spending a lot of money right now. They got a large set of checks from the federal government over the last year, they didn’t spend very much last year because of the pandemic. So they saved up a lot of money. And we’re able to spend more of that this year. And interest rates are very low, which matters, especially for things like home purchases. So that’s the demand side, it’s very high, then there’s supply, supply isn’t as high as it normally would be. In part that’s because of issues like microchips that people may have heard about where factories closed in Asia, because of COVID, or because of electricity problems in China. In part, it’s because not all the workers have returned to their jobs. It’s a whole Another issue that we can talk about. But for all those reasons, we’re just not making as much as usual, the same time people want to buy more than usual. And then finally, there’s just a set of global factors that have for example, raised the price of oil quite a lot which feeds in to higher gasoline prices.

Andy Slavitt 

The things that I think are most visible to people if I were to just kind of go through that, like it’s Christmas time. I think people are having a difficult time. Even sometimes finding the presence they want to buy people, in England, there’s petrol stations that are closed because they can’t even transport the oil to the petrol stations. I guess we call them gas stations but it sounds so much nicer when they say petrol stations. We have you know, the price of milk and the price of steak and chicken and fish much, much higher prices in restaurants are higher. So to some people this is distressing. On the other hand, it feels like we probably have workers that are getting paid more or perhaps their labor is more dear AND  It’ll drive up higher wages, it’s just not a bad thing. So help us, can you help us unpack some of these pieces and how they’re working together?

Jason Furman  10:09

Yeah. So stepping back, all in the economy is better today than I would have expected a year ago. If you had told me a year ago, I could have a GDP where it is today, an unemployment rate of 4.2%. But I’d have to get a lot of inflation together with it, I would have taken that deal, we have recovered much more quickly in terms of employment, we’re not all the way there. By the way, we still have a ways to go. But we’ve done a lot better than we did in the last many recessions. And that’s because the policy response has been so huge. So I think it’s important to keep both halves of this in your head, the things that are doing well. And the things that are problems. In terms of the problems, people are buying about 20% More than normal of toys, hobby equipment, musical instruments, sporting equipment, all of that sort of stuff. And when I say 20% More, that’s not 20% more spending, that’s actually 20% more stuff, after adjusting for inflation. So that itself encapsulates, you know, why the economy is having a hard time with this inflation, which is if people want to buy 20% more than they normally can. And you know, we can’t quite make as much as everyone wants, it drives the price of it up. So part of those Christmas weights aren’t because everyone’s suffering and not buying Christmas presents. It’s for the wonderful reason that everyone’s buying a lot of Christmas presents.

Andy Slavitt

Well, yeah, I guess except for maybe people who are on fixed incomes, right or lower income and don’t have a lot of margin for those people even small increases in price have got to be pretty significant, right?

Jason Furman 

Yeah. And that’s one thing that one worries about with inflation. If inflation is steady and predictable, it’s not much of a problem. If every year it’s 1%, that’s fine. If every year it’s 3%, that’s fine. People can organize their lives around that wages will go up with it, interest rates will adjust to ensure your savings are compensated for the inflation, etc. When you have a lot of inflation very quickly in a very surprising manner, which is what we’ve had over the last year. And it causes a lot of redistribution. As you said, if you’re on a fixed income, that really hurts you, if you’re in the same job you’re in last year, you probably have not gotten a six or seven or eight or 9% raise that you would need to keep up with the inflation and get more above it. If you got a new job, though, you probably signed that new job, but a lot more than you were making on your last job. If you have a mortgage, it helps you if you have a lot of money in the bank, it hurts you. So there’s a lot of redistribution, and winners and losers when you have this type of surprise inflation.

Andy Slavitt 

So you talk about this, the unpredictable nature. And that is what makes it hard for people to plan to know how to save to really figure out how to get by and day to day. And then you’ve got big ticket items that have a lot of these inputs have a lot of labor, they have a lot of petrol, and then they’ve got a lot of costs and a lot of capital. And you can imagine, you know, things like college tuitions, which seems to not need an excuse to get higher speaking as someone with just put a kid to college and has another woman right now. And so, like to the average consumer, who sees that these companies are reasonably profitable, they’ve been under paying the workers for a long time, in some cases, relative at least to what it takes to have a decent life. And in this country, the average consumer some of this looks like a little exploitative, a little bit of eyebrow raising my prices because I can and taking advantage of the situation. And then of course, it becomes self-perpetuating. You raise prices, you need to pay people more, you pay people more you need to raise prices. Is that Is it kind of what we’re dealing with?

Jason Furman  14:14

I mean, there’s two different I mean, many different ways to think about inflation, but you know, two broad traditions. One is looking at it from a macroeconomic perspective. You look at the total amount of fiscal stimulus, what interest rates are, you know, what aggregate supply is, and you do your macro analysis. I think that tends to be the better way to understand explain what’s going on. There’s then something separate, which the political system really taps into, which tries to explain inflation almost in terms of greed. And companies are taking advantage. I don’t like that for two reasons. One is, it doesn’t really explain why there’s inflation this year. Companies were greedy last year, they were greedy the year before they’re greedy the year before that, they’re always trying to make a buck. And you know, it’s not like gasoline prices went up this year, because companies were more greedy this year on the neutral. So I think it’s a very good explanation. But second, let’s go back to the toys that we were talking about. People, let’s say they want to buy 40% more of them than they did last year or the year before. And they can’t make 40% more of them. So what has to happen, prices need to go up. Otherwise, you’re just going to have this complete disconnect between how much people want to buy, how much companies are able to produce, and the higher prices, send a signal, you know, go out, figure out how to make more toys, get more companies into the toy business, while they also send a signal to people, you know what, maybe I’ll cool off and don’t buy as many of these. So I do think prices can play a useful role, especially when there’s such a big mismatch between supply and demand as there is at the current moment.

Andy Slavitt  16:28

Talk about another element of our economy, Jason, that it feels like our relationship with China is caught up in kind of all of this in our economy. I mean, you can enumerate the ways, right, you know, we have to borrow money to buy the things we want to buy. And we do that by selling bonds, and they buy a lot of those bonds. Most of the money that we then use to buy things comes from China, how much of it does many of the things that are manufactured. And so they go through disruptions in their economy, the political relationship with China is strained. And maybe you could talk a little bit about that, but goes through sort of ups and downs. Of course, there were Trump putting tariffs on goods from China and so forth. Are we locked in? Is this a good thing? Is it a bad thing? How should we think about that relationship and what it means to our economy into inflation?

Jason Furman 

Yeah. So you know, let’s compare the Soviet Union and China, the United States economy was very separate from the Soviet economy, as were the Western European economies, we traded with each other, we traded very little with the Soviet Union. And likewise, they traded with their set of allies behind the Iron Curtain, not a whole lot with us, China’s very different, things seamlessly, not seamlessly, but you know, much more seamlessly than when the Soviet Union moved back and forth across borders, you know, one part of your iPhone gets made in this country, another part in that country, the whole thing gets assembled in China, it was designed in the United States, etc. I think by and large, that has played a role in lifting a billion people out of extreme poverty, which is one of the stupendous achievements of the global economy over the last many, many millennia. I think it’s on balance created both challenges and benefits for Americans. I think on balance, it’s probably benefits, but we certainly could have handled it better. And that’s, you know, another longer conversation we could have, I have a hard time seeing how we, and how we’d link, the US and Chinese economy. First of all, the world isn’t like it used to be, Europe is going to trade with China, lots of other countries in the world are going to trade with China. So I don’t see how you build an iron curtain and get a lot of countries on one side of it. And China on the other side, I think a lot of stuff, for better or worse. It’s just so you know, inextricably linked at this point. There may be some things that we can and you see companies are doing to separate ourselves to some degree, but I think broadly speaking, we need to accept this as a reality and figure out the best way to manage it, not just hope the relationship goes away.

Andy Slavitt 

Well, it’s not as if making many of these things domestically, will bring the price down.

Jason Furman

Oh, yeah. And by the way, I mean, a lot of what we used to buy from China is now being made in Vietnam, and, you know, things that were made in Vietnam are being made in other countries as well. So, China’s wages themselves have gotten too high for them to effectively compete in many areas of manufacturing. And, yeah, and by the people, you know, sometimes treat cheap stuff as if it’s sort of frivolous, like, oh, it’s just cheap clothing. You know, it’s not frivolous when you have a limited budget. You can pay less for something, that’s really important. And so cheap stuff is another way of saying higher real purchasing power for Americans. And that purchasing power isn’t good enough right now. So cheap stuff is one way to help with it?

Andy Slavitt  20:14

Well, well, you’re right, when you walk into a Walmart or a Target, and you see a pair of pants, you know, for $9, or other goods and services for real, really low cost, you know, we tend to really like that, we tend to appreciate that we tend to feel like that is something we’ve come to expect that the cost of these things should go lower and lower. But I think the consequence, I think many people know this, is the reason that happens is because the people at Walmart in the people at Target, seek the lowest cost possible way of having it manufactured, delivered and stored and now to this point, because a lot of this is online, to get into people’s homes. And so the thing that I think this inflation rears up for me is that that’s not without consequence, that the consequence of not having large stockpiles of pairs of pants means that when we carry low inventory, we are very dependent on what we call the supply chain, working and functioning and being resilient. And when it’s not, when we get chips backed up into this country, or we have not enough truck drivers, or when the cost of labor goes up somewhere around the world, you know, the thing that we enjoy, we start to see why the thing we didn’t enjoy is what it depends on why it’s precarious, and why there are these tradeoffs.

Jason Furman

Yeah. I mean, in one sense, it’s precarious. In another sense. It’s impressive. We’re moving more cargo through our ports this year, than we did two years ago, we’re moving at 20% more of it through our ports. Now again, people want to move 30% More, making that number up, they want to move a lot, a lot more, instead, we’re just moving a lot more. We’re making more cars than we made two years ago, we’re not making as many as people want for everything they want to buy. And so after going through the most traumatic health event we’ve gone through in a century or and we’re still going through, and the most sharpest economic event since the Great Depression. In some ways, to me, it’s impressive that we can come out of that and still make more things. And even during the height of the pandemic last year, most things supply chains were able to keep up with, toilet paper had its challenges. And then of course, in your area, PPE and ventilators the situation was terrible. But you know, by and large, the global economy sort of hung together better than I would have feared, omit this just terrible, terrible thing that happened and you know, is still happening.

Andy Slavitt 

Okay, so you’ve given us a really good understanding of why we are where we are. Let’s maybe talk about how this is likely to play out and what maybe some of the ramifications are including political ramifications. As I said in the introduction, you were the head of the National Economic Council inside the Obama White House. So you were really driving economic policy. And so have an ethic a strong sense of how have a strong sense as anybody that I know how economics and politics converge together and in what’s already a black art, because it even blacker art when we put these things together. So what’s the first it’s maybe to tack? Like what are the things that are going on feel like they’re more long-standing adjustments, what feels like they may be temporary blips and are starting to correct themselves as either demand adjusts or supply adjust or logistics adjust and what feels like you know what, this is one that’s going to be we’re going to be dealing with for a longer period of time.

Jason Furman  24:12

The challenge for the president is the things that people are most upset about, like gasoline prices are mostly not in his control. And I actually think most of them are going to get better over the next several months. So the main thing if you want to help the economy over the next six months that you need to do is just be patient. Wait for more workers to return, wait for microchip production to ramp up, wait for ports to figure out how to process more stuff. In some cases, there’s a little bit you can do to speed that up. They put a lot of effort into that with the ports for example, but on most of it like labor force, there’s just don’t have a lot of dials to move that in the next six months. Now Let’s talk about the labor force three years from now, five years from now? Well, one problem in the American labor force is the childcare is really expensive in this country, that preschool is not as widely available as it is in many other countries. So that’s something that they should and are doing something about in the context of the Build Back Better legislation, that legislation is not going to help any problem we’ve talked about on a time horizon of six months, it’ll help a lot three, four years from now, politically, that’s a hard thing to explain. Substantively, that’s exactly the right thing to be doing is focused on the problems where you really can do something. And that’s more for the President right now, the medium- and long-term problems than it is the next couple of months.

Andy Slavitt 

And so when you think about inflation over the next year, what’s the outlook look like from you? Is it 6%? Is it adjusting? Is it too hard to tell?

Jason Furman  26:01

Well, it’s certainly very hard to tell anything could happen. The consensus of professional forecasters is that inflation will be about two and a half percent, which is a little bit above what the Fed wants, but way below what we’ve had this past year, I think that’s overly optimistic. And I personally expect inflation more in the 3% to 4% range, a number of these demand and supply factors we’ve been talking about, will continue to play out over the next year. Also, when expectations of inflation rise, that can feed in when wages rise, that can lead prices to rise prices can lead wages to rise, the famous wage price spiral. So I expect inflation won’t be as bad as it was this year. But that it will still be a decent amount worse than for example, the Federal Reserve would like it to be.

Andy Slavitt 

You and I both know, President Biden. And I think we probably I don’t want to put words in your mouth. But I’m guessing we would both describe him as somebody who’s very empathetic to the working person, and to the struggles of people who work by the hour, working multiple jobs, working union jobs, or retired on fixed incomes, that he actually really does understand their lives and their pain and their struggles in a way that, you know, maybe perhaps better than most presidents we’ve had do. And yet, we have a very visceral issue in inflation. It’s not just an imaginary issue for many people, as we, as we’ve said, People either go into stores and not being able to afford, you know, milk or chicken or food or not able to get to the end of the month, because they as you said, they’ve been in either a long-standing job where their wages haven’t gone up, or they’re on a fixed income. If you were in the White House now advising him on economic policy and also just communication strategy, etc. Like, where would you what would you be saying where would you be pointing the president to and his team?

Jason Furman  28:30

Yeah. So, people do ask me for message advice a lot, for very good reason. But I think the important thing in the message and the White House has shifted on this in the right direction in my view of the last six months, is not to think this is going away instantly. When this first emerged six months ago, the White House would basically say, oh, this is all temporary, you know, it’s about to go away next month, don’t worry that much about it. Now, when they were saying that, in fairness to them, that was the view of most forecasters. That was the view of the Federal Reserve. That wasn’t some political hack thing. That was the consensus view at the time. My view at the time was that the inflation was going to be higher, and was going to last longer. And so whatever you do, don’t tell people don’t worry, the problem is, you know, going to go away next month, to some degree, he started out office and maybe you were one of the architects of this Andy with really, you know, under promising and over delivering on the number of shots in arms per day. And so bringing something like that back to inflation, getting people ready for sort of another year, I feel your pain. I know it’s hard for you, I’m not trying to deny or say you know, it’s just trivial, you’re making it up. And you know, this is gonna be a problem with us for a bit, you know, here’s what I’m doing and tried to help it. You know, I really want to make sure more people have jobs, etc. But I think that would be good and if we got into a situation where they under promised and over delivered on inflation and inflation came out surprisingly lower than they thought. That’d be great. You know, so make your communities a short version, make your communication strategy as if inflation rates can be 4%. And if the inflation rate turns out to be two and a half, you’re not going to get into any trouble at all. Because you did it that way.

Andy Slavitt  30:20

And are there levers that you think he has or that you had when you were in that chair? I mean, obviously, some of this is on the Federal Reserve. And you could certainly talk about that and what you think they’re taking the right stance, but other levers, he has to help manage this. I think about the political consequences, historically, with gas prices go up and other things like that, which as you said, you know, the President deserves a little very little credit when gas prices go down. And they are very little blame when they go up yet. It’s inevitable, it seems to me that, that kind of helps make the political fortunes. So what can he control from a substantive level? What should what should they be doing?

Jason Furman 

Yeah, I mean, well, one thing is the Federal Reserve is the main agency tasked with managing inflation. That is one of the two goals that it was assigned by Congress, an economic policy tends to make the fed the central agency for that. I think the President made two great picks and Jay Powell is chair and Lael Brainard as vice chair. And importantly, when he announced them, he made it very clear that he expects them to be focused on both employment and on inflation. And he emphasized inflation quite a lot. I think the Fed was a bit behind the curve earlier this year, but they’re catching up. They’ve been pivoting over the last couple of weeks. They’re meeting again..

Andy Slavitt

Can you clarify for folks who haven’t been paying quite as much attention? What do you mean by that?

Jason Furman

Yeah, so basically, the Fed had been saying two things before, one, inflation is starting next month, going to be much lower. And two, we don’t anticipate doing anything for a long time to reduce the extraordinary amount of support the economy is getting. And the pivot has been number one, warning that inflation could be with us for some time, it’s not about to go away. And number two, saying that, you know, it’s going to start reducing some of the extraordinary support more quickly than it had anticipated. The support is both buying bonds, which lowers their interest rate and helps mortgages and keeping interest rates at zero or the interest rate it controls at zero. And by the way, when they reduce support, it’s still expansionary monetary policy, monetary policy will still be helping push the economy forward. It just won’t be pushing it forward as much as it was pushing it forward before. So the Fed has been shifting the president, I think has helped contribute to that shift with the tone he set for them. And that’s one of the most important things he can do. There’s then a whole bunch of small levers. What can you do with this port? What can you do with that supply chain? What can you do in, you know, problem crops up in this part of the economy, and they have almost like a SWAT team doing that. I don’t think it adds up to a whole lot. But it’s worth trying. I don’t have any better ideas than what they’re doing.

Andy Slavitt 

So what you’re saying is, you’re not worried that by the Fed, taking action to move interest rates up or stop the support of the economy by buying some of the bonds itself, that that’s gonna lead us into recessionary plays a place where unemployment starts to go up.

Jason Furman 

I’m not worried about that at all. I mean, one very simplistic way to think about it, and there’s debate about the numbers, but I’ll use a reasonable all these when the Fed uses, which is reasonable. If the Fed funds rate, which is the interest rate they control is 2.5. That means the car is in neutral. Any number below 2.5 means you’re pressing the accelerator, any number above 2.5, you’re pressing the brake. Right now that interest rate is zero. We’re talking about them raising that interest rate over the course of next year to something maybe like one. So one, you are still pressing the accelerator, you’re just not pressing it down as hard as you used to be pressing it, you need to raise that rate above two and a half percent, to be in a situation where it was equivalent to pressing the brakes. And they’re very, very far from that. And they should be very far from that, in my view.

Andy Slavitt  34:35

So to clarify, this is a decision on what the Fed funds rate is it’s not made by the President. And in fact, if you might recall, if you’re listening into this, there was a lot of argument, what Donald Trump was President that he was really attacking the independence of Chairman Powell and the Federal Reserve, because, you know, raising interest rates on the margin is something that the president could fear is going to slow down the economy. And what President Biden has done by your telling is basically in reappointing President Powell, reinforced his ability to have the tools to fight a more balanced fight against both inflation and unemployment, and sort of in so doing, in my mind, reinforce the importance of the independence of the Federal Reserve to not make political driven decisions.

Jason Furman 

Absolutely. And 100% agree with you. And just the most important, you know, evidence for that. Jay Powell is a Republican; he was appointed by Donald Trump. And now a Democratic President, Joe Biden is reappointing him. That is exactly what makes the Fed independent, is you have not just these long terms, but also the expectation that you’re probably going to be reappointed, even by someone of the opposite party. President Trump, in addition to constantly telling the Fed at your next meeting, raise rate mean cut rates by this amount do this do that, in addition to that, he also didn’t reappoint Janet Yellen, who had been appointed by Obama, who, you know, was an outstanding monetary policy maker who had support from both political parties. And he basically got rid of her and replaced her with a Republican. So yeah, so I think absolutely, President Biden is respecting the independence of the Fed and sending them the message that you have to figure out, you know what to do. But your goals are these exactly what set out in the law?

Andy Slavitt  36:40

And Janet Yellen is now our treasury secretary.

Jason Furman 

Lights worked out fine. Worked out fine for Janet Yellen. I don’t feel bad. I don’t feel bad for her. But you know, for the sake of the country, that’s just not the best rule to operate on. And by the way, it’s amazing, by the way, so much in Washington is so politicized. Almost every agency in Washington, this is one of the very, very few that has not been hyper politicized. And we all benefit from that, as a country. And President Biden has done a little bit to help keep it that way.

Andy Slavitt 

I mean, that’s encouraging. I mean, that, you know, we talk a lot on this show about sort of the anti-institutionalists kind of flavor in the country right now, mostly, as it respects the CDC and FDA. And the things that are really sort of stalwart scientific based a political institutions that guide us through thick and thin. And, you know, I’ve talked to a lot on this show about how we have these things called career employees, who really do most of the important work. They don’t set the policies but they carry out the policies and they often have the knowledge that influences how the political appointees carry out policies. And that keeps us relatively balanced. Those things are things to temporize, us, at least in the health areas, historically, now, in a number of areas, when Donald Trump became president, whether it’s EPA or HHS, or others, it was the first time in a long time that the career civil servants, and then the balance that they provide to our country. And the institutions were really threatened. And I think as we look at whether it’s a question of how many people are willing to be vaccinated, or any other question, this strain of people who want to disregard these institutions, is a big part of our landscape and a big part of the challenges that we’re dealing with.

Jason Furman  38:40

Yeah, I think at the Federal Reserve, they have hundreds of PhD economists, they’re very, very technically expert. We as a country, we’re very lucky to have them. In their case, Donald Trump really did try to politicize them by making comments in public and the like, but he mostly didn’t succeed. They mostly ignored him. He couldn’t fire Jay Powell, even though he wanted to. And he tried to appoint several governors who were so extreme, that Republicans in Congress balked and didn’t confirm them. So it was a good reminder that the institution has a certain amount of independence on its own, but also a good reminder that you can’t completely take it for granted. And if somebody had put more skillful effort into the politicization and undermining of it, they might have succeeded to a greater degree in that than President Trump managed to do.

Andy Slavitt 

Yeah, yeah. And I don’t know about you, but I’ve become a big defender of the career civil servants in our country, because I think they’ve needed defending over the last four to five years. And I’ve come to really hope that Americans appreciate how these institutions set us apart from governments across the world where they don’t have the transparency where everything is politicized. And by the way, I would add the press to that, too. I mean, I don’t know what you think. But like, as much as it’s very hard to be in the White House or anywhere and be in the spotlight at the press, as an institution, it’s one of the things that keeps us out of trouble and keeps Donald Trump from doing the most extreme things he would do. But even not even people who you don’t disagree with. It levels a set of accountability. I don’t know that you felt the same way when you’re in the White House. But the things that being the things that make our country work, sometimes messy, but always within a set of bounds that helps us continue to push forward. I think today, we have a number of people either because they’re on the political right or, or the far political left, or maybe generationally feel left behind by the system, that look at these institutions, and have less confidence in them that maybe we have, we have had in our generations, and that’s gonna break for some interesting times. You get inflation, you get pandemics, you get things like this, if we don’t have trusted experts that we can go to. It’s a different world.

Jason Furman 

Yeah, I agree with you. And it concerns me the diminishing trust in institutions, I would add universities, which is where I work, that, you know, especially one half of the public just almost dismisses out of hand. You know, I do think experts, and I’ll speak for universities, even though I can’t speak on behalf of all of them, you know, I need to do a better job too, for example, not letting our values get in the way of our scientific statements. And you know, I have values, I want to be able to share those, but I want to separate those from when I have a prediction about inflation, and people can take one of those without the other. So I think, experts, I don’t think it’s the mistrust is not the fault of the experts and not blaming them. But I think they do need to figure out what they can do to get that trust back. And I think part of that is the separating values from analysis. And second, I do think debate is valuable. So you should be able to phrase respectful disagreements and criticism and debate because that’s how knowledge gets advanced. So I think you can have absolute thankfulness for experts, absolute respect for them. And one way to show that respect, is when you want to engage in a debate or discussion, you know, do so but do so with respect, and based on knowledge.

Andy Slavitt  42:26

Thank you for that. Thank you for coming on and spending the time I will note that for those who haven’t followed your work as closely as others have, you have been somebody who has put out your best thinking 100% of the time, or at least so it appears without regard to necessarily whether or not it reflects, you know, perfectly poorly or well on the administration. So for example, you know, you, you during the Trump administration, you know, even though you’re you served in the Obama administration, when things weren’t as bad as people were making it, or when we had a good jobs report, or we had some good economic report, you know, you were one of the first to say, Hey, this is good news. This is bad news, and called it like you saw it. And I found that to be incredibly refreshing, Jason, because I felt like, we could all sell her own stories really well, we could all use it these days, it’s pretty easy to spread, whether it’s either truth, or even miss truth, but ways to make our stories look good. And very few people or very few sources anymore, where you could say, Look, this is someone who’s calling it like they see it. And it’s reliable. We tried to do that, you know, here on the show, we tried to do that another way to do that other forums, but you’ve been really successful at it in my view.

Jason Furman 

Well, Andy, that’s a huge compliment coming from you. Because yeah, I have a lot of respect with how you want to make the world a better place. How do you make the world a better place? Well, you know, it’s not just like, getting together with one team and screaming at the other team, no matter what’s going on in the world. You know, it’s not mindless bipartisanship, either. It’s, you know, trying to figure out what the truth is. And not just think the truth is whatever is convenient at that moment. So I I’m sure I get a lot of things wrong. But I’m trying and glad you notice that.

Andy Slavitt  44:20

[…] like you see it? I did for sure. So do you want to leave us with a note of optimism or pessimism, or somewhere in between?

Jason Furman 

I’m scared about the virus. So you should decide how optimistic or pessimistic I should be about that. But you know, broadly, the US economy, the fourth quarter, we’re going to have extraordinary economic growth, the unemployment rate, I expect to continue to come down, think inflation next year will still be a problem, but it won’t be as much of a problem as it was this year. And this is, you know, much better economically than the place we’re in two years after the financial crisis. So, I’m happy to end on that optimistic note.

Andy Slavitt 

Great, great. And I will ask you to commit to being our economic resource if over the course of the next year we get more confusing news or more interesting situations. We’d love to have you come back.

Jason Furman

I would love to come back.

Andy Slavitt 

Thanks, Jason.

Jason Furman 

Thank you.

Andy Slavitt 

Alright, that was Jason Furman. Thank you, Jason, very much appreciated getting kind of the straight scoop from an insider. Hopefully you liked it. Hopefully you tell your friends about it. Let me tell you what’s coming up next. We have what we like to think of is our NWA year spectacular. It’s really, it’s singing and dancing. It’s very, very lively show. What we’re going to do is we’re going to bring to you, we think, are the 10 best and smartest scientists. Maybe nine and maybe 11. Don’t freak out if you’re counting Exactly. But are 10 best scientists in the country, answering the questions that are most on your mind? We’re going to put the same set of questions to all 10 of them. And really, it’s going to be about what they expected 2022 Is it going to be better? Or worse? Is it going to be? How long will this first wave last? What need to be the priorities, what’s gonna be the scientific surprises, I think you will really enjoy that episode. And then you’re gonna have new year’s and Christmas holidays and whatever other holidays, if not Christmas, or the holidays that you like to associate with the month of December, we’re gonna have two episodes, where you’re going to get to hear me in two very different ways. One is an interview with me talking about the pandemic and about society interviewed by Julian Castro, who has a podcast called OUR AMERICA. And then the second, is a really crazy show that I really have for me hope you don’t listen to. Because it’s me on a show called I’m sorry, talking about what people in the pandemic have to apologize for it. It’s meant to be humorous, which of course, you know, I think I’ve got game there but I don’t know that I do. Anyway, and then we have a great show for you to begin the first of the year next year, but that feels like a long way off. Let’s get through this. Be well, be healthy, be safe. And we’ll be talking to you Monday.


Thanks for listening to IN THE BUBBLE. Hope you rate us highly. We’re a production of Lemonada Media. Kryssy Pease and Alex McOwen produced the show. Our mix is by Ivan Kuraev and Veronica Rodriguez. Jessica Cordova Kramer and Stephanie Wittels Wachs are the executive producers of the show, we love them dearly. Our theme was composed by Dan Molad and Oliver Hill, and additional music by Ivan Kuraev. You can find out more about our show on social media at @LemonadaMedia. And you can find me at @ASlavitt on Twitter or at @AndySlavitt on Instagram. If you like what you heard today, please tell your friends and please stay safe, share some joy and we will definitely get through this together.

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