The following is a transcript of an interview with economist Betsey Stevenson, a professor at the University of Michigan, that aired Sunday, June 5, 2022, on “Face the Nation.”
MARGARET BRENNAN: We’re joined now by University of Michigan Professor Betsey Stevenson. She previously served as Department of Labor’s chief economist under former President Obama. And she is in Ann Arbor this morning. Betsey, welcome to Face The Nation.
FORMER CHIEF ECONOMIST OF THE UNITED STATES DEPARTMENT OF LABOR BETSEY STEVENSON: Good morning. It’s a pleasure to be here.
MARGARET BRENNAN: We have seen more people return to the workforce, we saw that in the jobs number that we just got. The participation rate is back to almost where we were before the pandemic. But you’ve pointed out there are still problems in child-care, in nursing, in some of those caregiving roles, what does that signify to you?
STEVENSON: Yeah, I think it’s important to realize when we take a look at the labor market, that we haven’t seen all the jobs come back in services. We’ve definitely seen the jobs come back in the goods producing sector, in the service sector in health care and education, and particularly caregiving. We haven’t seen everyone get hired back, maybe because people are slow to go back to wanting to consume those services. And it may be that it’s just hard to find people to take those jobs right now.
MARGARET BRENNAN: I want to ask you,- this is- all- all these dots connect, but on the specific issue of inflation and risks to the economy. JP Morgan’s, Jamie Dimon said a few days ago,”the hurricane is right out there down the road coming our way. We don’t know if it’s a minor one or Superstorm Sandy, you’ve got to brace yourself.” So what should consumers be preparing for?
STEVENSON: Well, you know, honestly, what everybody wants consumers to do is slow their roll a little bit on spending. And that would actually bring some of the- some of the pressure on prices down. So you know, the Feds raising rates, hoping that consumers will spend a little bit less all the, you know, accusations around how much did the stimulus spending contribute, it’s really about do we give people too much money in their pockets, they’re in some of the best financial shape they’ve ever been. And the result is that demand is outstripping supply a little bit. So if people were to pull back voluntarily, then the Fed actually has less work to do. So I think that message of you know, brace yourself, it’s great. It’s sort of what we need to do. But the reality is that we don’t have to stop job growth in order to stop inflation, we might end up accidentally stopping job growth, pushing ourselves into a recession, but it’s not a fait accompli, we do not have to do that what we need to do is get demand down a little bit while supply can continue to grow.
MARGARET BRENNAN: Just to go back on what you just said there in terms of fiscal spending. That’s some of the congressional money that was thrown at the problem, the emergency spending. Do you think that all of us should have been structured differently, whether it was President Trump or President Biden? Should they be sending checks to people at home? Or was that really the main flaw in the deal they push through?
STEVENSON: You know, I think that there’s a little bit of a glass half empty glass half full perspective here. I mean, we had unemployment at 6.4%, when they started designing the American rescue plan. And most people predicted that it was going to play out a lot like 2008. 2008, it took eight years to get unemployment below 4%, the Congressional Budget Office thought it was going to take six years to get unemployment below 4%. That was going to take till 2026. So of course, the idea was, let’s make sure that we’re supporting businesses, that we’re supporting families so that we can have the fastest economic recovery we’ve ever had. We accomplished that. And we added 7.3 million jobs since that American rescue plan passed. The problem was, you know, things went even faster than expected. So, you know, we can look back and say, could we have done the same thing with a little bit less spending? Maybe? Or maybe not? Maybe we’d be in a situation right now with 5% unemployment with millions of people who are in jobs today? Would it still be sitting on the sidelines? And that’s a situation that I think nobody wanted, we wanted to get back to where we were before as quickly as possible. And it’s absolutely clear that the fast action that Congress took every single time, from the beginning of the pandemic to the American rescue plan, is why we’ve had the fast recovery that we have right now. And we just saw in the labor report yesterday that there are more opportunities than Americans have ever had before to find the job that’s going to work for them, they’re getting hired at incredibly high rates. And what we’ve seen for- the for the bottom part of the income distribution is household incomes are up nearly 12% even when we adjust for inflation. So when you ask me should we not have done that? I think we absolutely should have for most families, they’re better off and they know it. What we’re scared about is–
MARGARET BRENNAN: Well,–
STEVENSON: –we see prices rising. And we want to know how long–
MARGARET BRENNAN: exactly–
STEVENSON: –this good time can last?
MARGARET BRENNAN: –And that’s my question to you because the Fed can act really quickly here to try to cool things off. But they can’t stop the war in Ukraine. They can’t stop COVID. Should consumers be prepared that high prices are just going to be with us for the foreseeable future?
STEVENSON: Well, I think what we want, you know- I don’t think we should think high prices are going to be here for the foreseeable future. I do think the Fed is going to take some action, I think they’re going to bring prices- they’re going to bring the inflation rate down now prices, but they will bring the inflation rate down, but they’re not going to be able to change those relative prices. So gas is still going to be expensive, relative to other things. Until we end this war in Ukraine. I mean, look, the price of gas is up $1.50 a gallon since Putin started amassing troops at the border. The Fed can’t undo that. But what it can do is reduce the rate of price increases on average, but I still think you should be thinking about, you know, is it a good time to get a fuel efficient car or buy that electric bicycle?
MARGARET BRENNAN: All right, Betsey Stevenson thank you for your analysis. We’ll be back in a moment.