Good morning, Broadsheet readers! Abortion travel benefits could come with a tax liability, Amy Griffin is an investor to know, and White House economic adviser Cecilia Rouse is working through a moment of unusual economic uncertainty. Have a productive Monday.
– All about economics. As President Joe Biden navigates record inflation and a potential economic downturn, he relies on a key adviser: Cecilia Rouse, chair of the Council of Economic Advisers.
The former dean of the Princeton School of Public and International Affairs was a member of the three-person CEA during the Obama administration and had a long career as a labor economist with a focus on education. Biden’s appointment of Rouse as CEA chair in 2020 made her the first Black woman to hold the influential title.
Rouse’s expertise has been especially critcial as the White House looks to tamp down soaring inflation. We spoke on Friday afternoon about this moment of economic uncertainty, shortly after the release of the Bureau of Labor Statistics’ July jobs report and before the Senate convened this weekend to pass the Inflation Reduction Act. Vice President Kamala Harris cast the tie-breaking vote on Sunday to pass the wide-ranging spending bill, which aims to address climate change, lower prescription drug costs, and decrease the national deficit.
This interview has been edited and condensed.
What is your view on the state of inflation today?
In the month of July, the economy created 420,000 jobs. Those employment gains were broadly shared; the unemployment rate is 3.5%, which is the lowest rate in over 50 years. Our labor market is very strong. However, we know we have elevated inflation. It’s unacceptably high. The Federal Reserve, which is charged with keeping inflation under control and maintaining price stability, while also maintaining maximum employment, has a difficult job. It’s trying to bring down inflation without increasing unemployment. With our labor market strong, that may give the Federal Reserve the headroom it needs to bring down inflation without causing a lot of disruption in the labor market. A soft landing—bringing down inflation without causing too much pain for the American worker.
Is that a task the U.S. will be able to meet, or will it be a challenge?
It will certainly be a challenge. We have historically high rates of inflation. The president understands that. It really has its roots in the pandemic, where we powered down our economy, which disrupted supply chains. Businesses made decisions about forthcoming investments, not knowing what the pandemic would bring. Our economy has been weathering the pandemic well, which meant that there was a lot of demand for goods, but the supply wasn’t necessarily there, which has caused inflation. But the U.S. economy continues to power along, which gives a path for the Federal Reserve to fulfill its two goals.
The Bank of England said a few days ago that it expects a recession in the U.K. What does that tell us about the U.S.?
The United States is not in exactly the same position as the U.K. The United States had a historically strong recovery from the pandemic recession. We have an economy where not everyone is back to work, but the employment level is above where it was in February 2020. Part of the U.K.’s problem is Russia’s war against Ukraine. That affects U.S. workers too, but for the U.K. and other countries in Europe, they’re very much dependent on getting their energy from Russia. This war has been costly, making it much more challenging for their economy.
Why is there so much debate and uncertainty right now about the economic outlook?
What makes this moment unique is that we haven’t lived through a pandemic in the last 100 years. We haven’t lived through an economic situation in which we literally put the economy in a medically induced coma to power it down, and then tried to bring it back up. When you’re talking about a $22 trillion economy, that doesn’t happen overnight. We’ve severed the relationships between workers and firms—workers have to find new firms, firms have to find new workers. We didn’t know what people were going to want—what kinds of goods, what kinds of services, and how much. All the relationships that existed in the economy before the pandemic have been modified, some more drastically than others. That’s made it very difficult for analysts to forecast where we’re going and what lies ahead.
How are these economic challenges affecting women right now?
We know that care responsibilities had a disproportionate effect on women. We saw a big loss in women’s employment. But we have seen recovery for women to where they were pre-pandemic; the unemployment rate for women fell over the past year from 5% to 3.1%.
And inflation affects everybody. We understand part of the challenge is that anybody who shops and needs to buy anything is going to be affected by the change in price.
You’re the first Black woman in your role. How does your lived experience influence the perspective you bring as you advise the president on these economic issues?
I’m looking at a lot of the same issues, the way any other economist would look at them. But I do put a particular emphasis on those parts of my experience in my growing up that have been unique to me, that another person may not bring. I care a lot about women’s labor force participation and the challenges of balancing work and care. I’m a mother myself, so I understand those challenges. I know how important it is that we support women and families in both taking care of their families and going to work if that’s what they choose to do. I also ask more questions about African-American communities and communities of color. I may ask slightly different questions, but fundamentally I’m here to advise the president on core economic questions.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
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PARTING WORDS
"The movie is a story about white women getting to play baseball. That’s just not enough."
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