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Inflation: U.S. economy is ‘well-positioned to address this challenge,’ WH economic adviser says

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White House Director of the National Economic Council Brian Deese joins Yahoo Finance Live to discuss the U.S. economy amid high inflation concerns, volatility, medical debt relief, semiconductor shortage woes, and the outlook for oil.

Video Transcript

- To talk about what is playing out over at the White House. President Biden bracing for yet another ugly inflation print come tomorrow with CPI in March expected to have risen beyond that 7.9% level that we saw back in February. This comes as data from the UN shows global food prices jump nearly 13% to a new record last month. Let's bring in Brian Deese, he's White House director of the National Economic Council.

And Brian, good to talk to you today. We know the president is expected in Iowa tomorrow to talk about the actions the administration has taken to try and curb these food prices or global prices that have gone up. What's the message as Americans brace for yet another rough report come tomorrow?

BRIAN DEESE: Well, we certainly expect tomorrow's report to be elevated, and it will be where we see the impact of Putin's invasion in Ukraine. We know and we have been tracking that that invasion has created a global supply shock in energy and food and other commodity markets, and that impact is being felt and played out over the course of March. So we expect to see that in the numbers tomorrow.

And our message is pretty clear, the president is going to do everything in his power to try to provide some relief on those prices. And the actions the president is taking are already having some real impact. He announced the historic release of oil from US strategic reserves and then brought the world together around a coordinated release from oil-consuming nations. We've seen the price of oil come down 10% to 15% since those announcements.

The president will be in Iowa tomorrow talking about additional actions we can take, but this war has consequences and Putin's price hike is being felt at the gas station. We certainly, that will be reflected in tomorrow's numbers.

- Hey, Brian, a fellow Brian here. I want to ask just kind of about the aggregate picture here though because the inflationary story was happening in the United States prior to the Russia-Ukraine conflict. So even though that's likely to exacerbate the prices that we'll see reflected tomorrow, Americans are still trying to figure out how much of the macro picture from the stimulus from both the Fed and Congress contributed to the price increases that we're seeing. So how is the messaging going to be delivered with regards to that overall picture and kind of maybe how other types of macro policies play into it?

BRIAN DEESE: Well, look, prices are elevated here in the US, they're elevated all around the world because we are in a globally supply constrained economy, and we're now dealing with the added shock to the supply side that have come from the war in Ukraine. We're seeing elevated inflation across the Euro area, some of the highest numbers ever recorded there.

I think what's important as we look at the question you're asking about the American economy is to recognize that we are well-positioned to address this challenge from a position of relative economic strength, and that is because of the strength of our economic growth and our labor market recovery. So we're seeing some of the strongest growth anywhere in the world, we're seeing the strongest labor market recovery anywhere. Those are really powerful attributes that we have going into this challenge to try to come out on the other side.

But at the end of the day, prices are too high and American families are feeling that. And so we need to take every action we can to try to make things more affordable, provide some relief as the Fed acts the way that we anticipate it will on the monetary policy side. What we can do in the fiscal policy side is try to make things more affordable and give people some relief here in the interim period.

- Brian, let's talk about oil because you did just allude to that record release from the Strategic Petroleum Reserves. This is, of course, not the first time he's tapped into SPR, and we have seen in the past that there has been temporary relief but those lower prices have not necessarily been sustained. What does the White House see as the next necessary step to try and bring prices down for a more sustained period? Over in Congress, we'd have heard everything from a gas tax holiday to a windfall tax being floated around among Democrats. Is the White House supportive of our newest policies?

BRIAN DEESE: Well, this relief of this release from the Strategic Petroleum Reserve was truly unique in a couple of respects. The first was in the magnitude. A million barrels a day, that was a commitment from our administration to put a million barrels a day onto the market to try to address this supply shortage that we have because of Russian oil coming off the market coupled with an effort by the International Energy Agency countries to put in another 60 million barrels a day or close to another million barrels a day on the market. So that's between 1 and 2 million barrels a day going on to the market to try to address that.

The second is duration. And the president said, this is going to sustain for six months, which acts as a bridge. We know US producers are bringing production back online, we know that they will be up by about a million barrels a day by the fall. So this Strategic Petroleum Reserve release acts as a bridge. It's unique in both those respects, we haven't used the Strategic Petroleum Reserve in that way previously in our history, and I think that is why it's important and significant.

In terms of additional measures, we're looking at everything. The president will be talking about some of those measures tomorrow in Iowa. We're not taking anything off the table when it comes to helping American families, but I would note that we're seeing the impact of those reserve releases in the market now, and we're going to continue to look at anything that we can do responsibly to try to build on that.

- We have certainly seen the supply constraints exacerbated among semiconductors as well in part because what's happening with Ukraine and Russia, but this is an issue that happened well beyond that. And we've heard the president increasingly frame this as a national security issue, trying to make sure that more of that production, the manufacturing happens back home here. And yet we're talking about a three-year, five-year, 10-year timeline. What's the thinking at the White House about how you address this issue in the meantime?

BRIAN DEESE: Well, it's a great question but I would say this, the sooner we get started, the quicker we will have economic and national security on our side. Look, this is a national security issue. We've gone from producing roughly 40% of the global semiconductors to 12%, but importantly, the share of the advanced leading edge semiconductors that we produce in the United States is zero. Zero, today. We're entirely reliant on foreign producers for those leading edge chips. We have to change that equation.

You're right, the only way to change that equation is to build capability in the United States, and that is going to take some time. But we would have been better off if we started that last year, and we'll be better off if we start now rather than waiting months and months into the future. We have a bill in front of Congress, we saw some really important progress at the end of last week with both the House and the Senate appointing conferees to get together to try to hash out that final bill, but the message of the president will be underscoring as both for our economic and our national security.

We got to resolve those differences, get that bill to his desk. The sooner that happens, the sooner we can start to build that strength back in our own semiconductor capability.

- And then Brian, lastly, I want to ask about some of the news that was made this morning from the White House regarding Vice President Harris's efforts to try to address medical debt and the burden that that imposes on Americans. Now, can you walk our viewers through exactly what that means. It's understood that it's going to relieve some of the reporting of how that medical debt affects credit scores for the ability of Americans to take on further debt, but it's not full on forgiveness, is it?

BRIAN DEESE: No, I will be over with the vice president later this afternoon, we're really excited about this announcement. Look, medical debt affects a broad swath of Americans. It's about one in three Americans has medical debt. But medical debt is not like other forms of debt. In almost all cases, most cases, you don't choose to take it on, it happens when you have a event happen in your life. And medical debt is not a very good predictor of future credit quality as well.

So we're going to take a couple of actions today. The first is to review comprehensively all of our credit programs to help make it easier if you're looking to get a mortgage from the FHA or the VA or USDA, not having the medical debt that you might have be a barrier to you getting access to that mortgage. Likewise, if you're looking to get a small business loan from the SBA, the Small Business Administration, not having medical debt be a barrier for you to do that.

And also, crucially, the VA, the Veterans Administration will announce new steps to make sure that low income veterans who are currently eligible to actually have their medical debt written off and forgiven can actually take advantage of that. Today, many low income veterans are eligible for that relief, but they can't get it because the process is too complicated. We're going to simplify that to make sure that those veterans get the relief they deserve.

- Brian Deese, director of the White House National Economic Council. Thanks so much for stopping by Yahoo Finance this morning. Appreciate it.