Relief plan launches a ‘robust and reliable recovery that puts this volatility behind us’: White House CEA

Jared Bernstein, member of the White House Council of Economic Advisors, joins Yahoo Finance to discuss job growth and stimulus bill concerns.

Video Transcript

MYLES UDLAND: Let's look closely or more closely at that jobs number. We saw 379,000 jobs created in the month of February. The unemployment rate ticking down to 6.2%. Average hourly earnings up about 5.3%.

And let's stay on the jobs report just a little bit. We're joined now by Jared Bernstein. He's a member of the White House Council of Economic Advisors. Yahoo Finance's Jessica Smith also joins us as well. So Jared, I'd love to start the conversation with how you and the administration see a number like this. We've heard from a couple of economists today who expect to see a million-plus jobs created per month in subsequent months. Maybe that's May. Maybe that's June as jobs are added back. How are you and the administration thinking about both the positivity behind a number like that but also emphasizing the hole we are still in relative to where employment was one year ago?

JARED BERNSTEIN: Well, the first thing we do is we look at the big picture, and we try to figure out how our policies-- in this case, the American Rescue Plan-- fit into that big picture in the light of this new information. And what we conclude is that even with today's report, while we're always happy to see more Americans get jobs, of course, we are 9.5 million jobs in the hole relative to a year ago. That's actually about 800,000 jobs worse than the lowest point of the Great Recession.

There are about 10 million people unemployed. There 18 million people claiming uninsurance benefits. That's been massively elevated for the past year. There are 4 million people stuck in long-term unemployment. And today we learned that the Black unemployment rate is a highly elevated 9.9%.

We also learned, by the way-- and I think it's important to get under the hood of these top-line jobs numbers-- that state and local education, public education, shed another 69,000 jobs. That's a negative. That's down 1 million over the past year. So our state and local resources in the American Rescue Plan precisely targets that problem. So yes, we're certainly happy to see more people get jobs, but we are well aware of the desperate need for relief and rescue in this economy. And that's what the rescue plan targets.

JULIE HYMAN: So Jared, it's Julie here. As you give that ringing endorsement of the plan, once it's passed, what is that going to mean for jobs? What do you expect for monthly jobs growth once that aid package gets through?

JARED BERNSTEIN: Well, that's a great question. A couple of things. So first of all, we believe that this package-- I shouldn't say we-- independent forecasters-- Moody's is one of them. I think the IHS forecasters come up with a similar result. We find that this plan pulls full employment forward at least a year. So it's not just that we're going to be adding numbers to the monthly job gains. It's that those numbers will be consistent.

And I think that's really the most important answer to your question. In today's jobs report, we had, of course, a large bump up in the leisure and hospitality sector. In fact, that accounts for 90% of the top-line 379,000 gains. Well, a couple of months ago, that sector shed half a million jobs. That kind of up and down, that kind of volatility-- first of all, it creates uncertainty and hardship for the American people, particularly the most economically vulnerable folks on the bottom leg of the K in what's been a K-shaped recovery. But it also means the macroeconomy can't launch a reliable and robust recovery. So by attacking both underlying causes of the problem, the health crisis with the vaccine and the economic crisis with relief, the American Rescue Plan launches a robust and reliable recovery that puts this volatility behind us.

JESSICA SMITH: I know the next phase here is going to be recovery, turning to infrastructure. We have heard concern from some business groups like the US Chamber that putting $1.9 trillion in this first package is going to take away from infrastructure spending. Is that a concern at all? Is that a legitimate criticism, that if you're putting so much money upfront, you might not have as much for the recovery portion of this effort?

JARED BERNSTEIN: I don't think so in the following sense. I think, first of all, you have to distinguish between relief and investment. And I'll make that more clear in a second. But you also have to recognize that, as the president has consistently said, the more permanent ideas should have pay-fors. They should be paid for.

Now, when you're talking about a temporary measure like the relief package that gets into the economy, meets the needs of families and businesses, finally deals COVID-19 the knockout punch that it has heretofore eluded, and gets us to the other side of the crisis so that we can launch a reliable recovery, that should be deficit-financed. But when you're talking about more permanent programs, whether that's clean energy, education, infrastructure, racial equity, housing, President Biden has suggested those should be paid for and that they should be paid for with progressive pay-fors. And those plans will be trotted out across the next few months.

So I think it's very important to look at the full picture to net out what's being paid for and what isn't. I also think-- as I said a second ago, remember, investment programs have a return. And one of the things that I think, especially on Yahoo Finance, we should think about is the difference between borrowing costs and the return on infrastructure, education, clean energy, racial equity investments. Those returns are characteristically multiples of the borrowing costs. And therefore, these are smart public investments that need to be made.

BRIAN SOZZI: Jared, we've had some folks this morning suggest to us that the US economy could be creating over a million jobs a month very, very soon. If you take that job creation, bolt it alongside a $1.9-trillion stimulus plan, how concerned are you about inflation?

JARED BERNSTEIN: Well, first of all, let me just say that even with today's report, if we kept creating jobs at this pace, it would be two years before we were back to where we were when the crisis hit a year ago. So we would very much welcome accelerated job gains. And the American Rescue Plan will help to deliver precisely that, as I said in response to a question from Julie a second ago.

Now, the inflation question has been raised, and I think it's very important here to distinguish between heat and overheat. Nobody in the White House is arguing that there are zero risks of price pressures. That would be irresponsible. It would be something we would, of course, not do because any economic policy invokes risk.

So what you have to do is risk management. You have to examine the risks of doing too little against the risks of doing too much. Now, the risks of doing too little are extremely elevated when you have a Black unemployment rate that's almost 10%, when you have 4 million people stuck in long-term unemployment, 10 million people unemployed, 18 million people with UI claims, when you have hunger and eviction threats out there.

Those risks are much higher, in our view, than the risks of overheating when you consider the following facts. First of all, the economy's capacity is much larger than many of the folks taking the overheating path recognize. Secondly, the spend-out of the plan is very much front-loaded when it comes to direct income payments. That's the checks and the unemployment insurance. But it takes longer to spend out on some of the other factors, and that puts pressure against prices.

And finally, some of these resources are initially going to be saved by people who desperately need a savings cushion in such uncertain times, shortly thereafter spent when they hit needs, when their needs become prevalent, like making their rent and their mortgage payments. So if you put all that together, we think we're looking at heat, not overheat.

MYLES UDLAND: All right. Jared Bernstein, member of the White House Council of Economic Advisors. Jared, really appreciate you taking some time to talk with us this morning. I hope we can be in touch in future months on this Jobs Friday.

JARED BERNSTEIN: My pleasure.