He wanted to pose this question to Ron Klain after his instantly legendary tweet yesterday…
This 👇👇 https://t.co/ymh53nEHAg
— Ronald Klain (@WHCOS) October 14, 2021
…but Biden’s prime minister isn’t coming anywhere near Fox News. So Hemmer had to make do with Jason Furman, the liberal economist who sent the original tweet that was amplified by Klain.
I think Furman ended up being victim of his own jargon here — to a degree. “High class problem” could be misunderstood to mean “upper-class problem,” and of course inflation is no such thing. Just the opposite: Rising prices are a regressive tax on the middle and lower classes. The rich can shake it off. The poor starve.
In common lingo, though, a “high class problem” is a problem that’s created by things going especially well. That’s, uh, also not a great way to describe an issue like inflation that threatens to consume the average joe’s budget as it increases, but Furman’s right that increased consumer spending helps create upward pressure on prices. Americans are flush with COVID stimulus cash and they want to catch up on the fun they missed out on last year so they’re spending more lately, which is contributing to inflation. That’s the point he sat down to make on Fox today while acknowledging that of course inflation has a dark side too.
Good luck to Democrats next year in trying to convince voters that crippling prices are actually good news, kinda sorta, and if anyone’s to blame it’s the public for enjoying itself too darned much lately. Watch, then read on.
It’s true that consumer spending was surprisingly strong last month, beating expectations despite rising prices. From clothing to sporting goods to toys to cars, money was flying everywhere, per the AP. Evidence that inflation really is a “high class problem,” as Furman suggested? Not according to another former Obama economist, Larry Summers:
Mr Summers said the price pressures he saw mounting in the economy reminded him of the late 1960s, when inflation shot up drastically from below 2 per cent to more than 6 per cent, even before major supply constraints were evident.
“We saw inflation move from having a one handle in 1966, to having a six handle by 1969,” Professor Summers said.
“And we’ve got much larger budget deficits today than we did then. We’ve got much more in the way of supply bottlenecks emerging much sooner than we did then.
“So, I think we’re looking at a very serious kind of situation.”
If I were Klain and saw this graph, I’d wet myself:
Typically voters treat the unemployment rate as a barometer of the country’s economic health. This year fears of inflation have led consumer prices to soar past it, to levels that weren’t even approached during the Trump presidency. If Team Joe is planning to run in the midterms on America’s (slowly) rising job growth, believing that’s the ticket to getting the public excited about the economy, they’re in for a surprise.
As recently as June, unemployment was given equal weight with inflation by the public as an indicator of economic vitality. Not anymore:
It’s strange that Biden’s job approval tanked just as this “high class problem,” supposedly indicating America’s economic strength, really started to bite.
Jake Tapper had Jen Psaki on his show this afternoon and asked if it wasn’t perhaps a tad tone-deaf for the White House chief of staff to dismiss inflation as a “high class problem.” Psaki responded the way Furman did to Hemmer, looking on the bright side:
Now more people have jobs. More people are buying goods. That’s increasing the demand. That’s a good thing. At the same time, we also know that the supply is low because we’re coming out of the pandemic and because a bunch of manufacturing sectors across the world have shut down because ports haven’t been functioning as they should be. These are all things we’re working through.
What people should know is that inflation is going to come down next year. Economists have said that. They’re all projecting that. But we’re working to attack these issues that are impacting the American people every single day. But there’s different issues in different sectors and many of the ones you mentioned.
Is it going to come down next year? Three days ago the president of the Atlanta Federal Reserve warned Americans that “transitory” inflation no longer looks so transitory. One analyst forecasts that we’ll see “transitory” inflation from a variety of sources — first supply chains, then energy prices, then striking workers — adding up to something that feels more durable.
But I suppose Furman and Psaki are fatalistic about this. So long as inflation can still be dismissed as a function of roaring consumer spending (in part), they’ll spin it as a “high class problem.” Once it can’t be, there’s no spin that will save Biden and his party.