White House shifts messaging on inflation and the economy ahead of midterms

Alcindor: Inflation is at a four decade high, and rising prices at grocery stores and gas stations are hitting Americans so hard. With six months to go until the November elections, the midterms of course, the administration is trying to shift its messaging on inflation and the economy. 

Earlier this week, the Treasury Secretary Janet Yellen admitted on CNN that a year ago, she was incorrect when she said inflation would be, quote, transitory. She told the network, quote: I think I was wrong then about the path inflation would take.

All that said, there is I should say some good news that the May jobs report was better than expected, despite fears of an economic slowdown. 

Joining us to discuss the state of the economy is Amara Omeokwe. She is an economics reporter for "The Wall Street Journal". 

Thank you so much for being here. I want to start off with where we are. You’re an economics reporter. I’m so happy you are here because we really need an economics reporter to break it down for us. 

Jamie Dimon is saying, who is, of course, I should tell people, the CEO of JPMorgan Chase. He’s saying that there’s going to be an economic hurricane. Mothers will be able to find baby formula. But we also have a jobs report that looks better. 

So, break down sort of where we are in the state of the economy and the horizon. 

Amara Omeokwe, Economic Reporter, The Wall Street Journal:  Well, the state of the economy is really sort of in a delicate place, right? There are a lot of bright spots. If you look at where we are in the labor market, for instance, we had a pretty solid jobs report today. If you look at where household balance sheets are, those are some of the positive signs in the economy. 

But, of course, we have inflation which as you mentioned is at a four-decade high, it is hitting families hard. And if you look at polling data and consumer sentiment data, Americans are really concerned about the higher prices at grocery stores, at gas pumps, like it’s a big problem for a lot of Americans. And then you also have the Federal Reserve which is mounting this very aggressive campaign to lower inflation. 

They’re raising interest rates. They’re shrinking the size of their balance sheet. They are basically trying to tap the brakes on the economy. And that is what is giving corporate leaders and economists some pause. The fear is that the Federal Reserve will not bring down inflation without launching us into a recession basically, a really significant slowdown.

So, I think people are hopeful that hopefully, you know, the Federal Reserve will be able to do it, but there is fear amongst some that they will not be able to and that’s sort of a big headwind and a big question mark for the economy in the months to come. 

Alcindor:  And another big question, Amara, is what can President Biden actually do? There have been so many presidents, all the way from LBJ, to Nixon, other presidents who tried to deal with inflation and failed. How much can he really impact the economy on his policies and his messaging? 

Omeokwe:  Well, I mean, he is trying. The administration is trying. You saw him say that they are going to be engaging in this month-long campaign to speak to Americans about the economy, to try and reassure Americans have a plan to fight inflation. If you talk to any economist, they will say, look, the president really can’t do much, his administration can’t do much. 

Really the most powerful player is the Fed and we just sort of have to wait for the Fed to make its move and see how they work through the system. But at the same time from a political standpoint, it is impossible for the president and his administration to say it is the Feds responsibility, we’re not going to do anything about it. 

So, you do see them trying to reset on your messaging. You see him talking about what they are trying to do, whether it beer a release from the energy reserves, or trying to push Congress to pass some of President Biden’s economic agenda. But if you talk to economists, they say those things really don’t move the needle on inflation, particularly in the short term. 

Alcindor:  And, Annie, this week began with President Biden writing an op-ed in "The Wall Street Journal", calling on Congress to pass things like a clean energy tax credit or investments and tax reform. How much is Congress interested in what the president is talking about? 

Karni:  There is a lot going on. 

Alcindor:  I love this answer by the way.

Karni:  I do think it is interesting that Biden has spent the week kind of tacking into, you know, they have been trying -- for months more optimistic about inflation and the economy than the reality has been. And with Yellen saying she was wrong and the administration now trying to kind of tack and not -- they have positive economic indicators like the job numbers that they’ve been trying to highlight, but now, they are trying to really show that they are taking inflation issues more seriously. 

June is going to be an interesting month between the Roe decision coming out of the Supreme Court, gun vote in Congress, the January 6 hearings, this is going to be a big month for Democrats to try and convince voters it is not just a referendum on the president and on Democrats in control of Congress, that this is a choice election. And that like this is a big month where that like it will either happen or it won’t. 

Alcindor:  Yeah, I was going to ask -- Eugene, I want to ask about the challenges. I want to ask about Janet Yellen and her saying that she is wrong. What was going on there because she fell on her sword? 

Daniels:  Yeah, no, absolutely. It was something that we don’t often hear especially from this administration, because when you think about the invasion becoming evident, Jen Psaki, who is the press secretary at the time kind of scoffed at the idea that it was going to stick around for a long time. And what they kept using and saying was that it was going to be transitory, which means it’s not going to be around very long. 

That feels a lot different now, right? And so, Janet Yellen saying I was wrong on this, that was brought up to the current press secretary, Karine Jean-Pierre, this week, and basically like, were you guys wrong or will you say that as well? And she was like, no, we’re not. She’s just kind of moving -- you know, kind of moving on and saying that. 

But when you talk to the American people, what they have said is the whole time they felt they were not taking it seriously enough. President Biden giving speeches, telling people I feel your pain, but he kept talking about those economic indicators that are good for this administration or for the country. People were not hearing that when the milk was expensive, when gas was going up. Now you have this issue of infant formula not being able to come to mothers and not being on shelves, so not feeling the same thing.

Alcindor:  There are so many challenges. Amara, I want to get your sense of what you thought about Janet Yellen’s comments. 

And also, you told our producers that people sort of just feel sour right now around the country. So, weigh in on her statements and how the way that people are feeling is also part of this. 

Omeokwe:  Oh, yeah, I agree with Eugene. It was a rare moment of candor from the treasure secretary that you don’t often hear from administration officials. 

But I think what you also heard her doing there is trying to explain why we have the inflation that we have right now. You know, in those same comments, she said there were circumstances that could not have been foreseen that caused supply shocks to the economy driving the inflation we are seeing right now.

And what I sort of heard her saying is basically like a pushback to the criticism that Republicans have been constantly launching at this administration, that it was their policy that’s fueled the inflation that we’re seeing right now. What you heard her and other administration officials often doing is saying, look, there are a lot of reasons we have inflation, inflation is a global problem. We have the supply chain issues. 

So, they are pushing back on that -- on that criticism from Republicans. Whether the messaging resonates with voters and breaks through with voters, that just remains to be seen. As others in the panel said, the administration has been messaging on inflation for months and we still see that in polling data and consumer sentiment data, people pretty much aren’t buying it. They feel bad about where the economy is now, they feel bad about the outlook for the economy in months to come. So, this really is a difficult position for the administration to find itself in. 

Alcindor:  And, Eugene, going back to the great point about the challenge the White House faces, take us a little bit into how they’re prioritizing what are they dealing with and just the overall mood in there because when I talk to folks, they sound like they are overwhelmed, but like this is what the White House has to deal with. 

Daniels:  Exactly. Yeah, the mood is sour. It’s sour outside in the country and it’s sour in the White House because there’s so much is going on. 

And the biggest problem we have been talking about the entire show is there is not much the White House can do for some of these issues, on inflation, on guns, on some of these things that the American people want them to do. There’s not much for them to do. So, it feels like they have to -- 

Alcindor:  And they also said -- I should also say that aides also said that they didn’t tell President Biden about the baby formula issue until April. They are also walking back some of his statements on Taiwan. There’s sort of this frustration it seems like. 

Daniels:  Yeah. There’s like a flurry of what seems like missteps, right, especially talking to the administration and asking why the president was not briefed on baby infant formula when the people who make it new that the closing of the Abbott facility was going to be an issue immediately. Why didn’t he know? And that is one of the many things that they are dealing with. 

And it is -- you know, White Houses are hard. Running of the country is very difficult, and at a time when people are feeling how they are feeling, this administration feels like they don’t have a lot of things that they can do, but are pushing forward, talked about chewing gum and walking at the same time. 

Alcindor:  Yeah. Well, a lot of challenges to deal with. 

Thank you so much to Amara, Eugene, and Annie, for joining us and for sharing your reporting.