Kevin Hassett, director of the National Economic Council, says he will not change his view that recent inflation is a blip, pointing to a Cleveland Fed nowcast showing October tracking the prior three months.
Hassett argues real consumption has risen by a trillion dollars since Trump took office, about $5,000 per family, while the hosts counter that wages are slowing and trailing inflation.
Hassett declines to comment on the White House review of Fed Governor Lisa Cook, saying a commission reporting to the president will run a fair process, with a meeting set for December.
Hassett insists inflation spike is a blip before midterms
A week before the midterms, Kevin Hassett defends the Trump economy against an inflation spike. He treats September's jump as an energy-driven blip, a cost of confronting Iran, and points to rising real consumption as proof households are better off. On the Fed, he leaves the rate decision to October data and keeps the Lisa Cook review at arm's length.
Takeaways
Hassett still calls September's inflation spike a blip. PCE rose 0.5% in September, the most in six months. Hassett blames energy prices in part and cites the Cleveland Fed nowcast. If October matches it, inflation will have run near 2% in June, July, August and October.
Real consumption is his main affordability defense. Hassett says inflation-adjusted consumption has risen by a trillion dollars since Trump took office, about $5,000 per family. He credits confidence, record-low jobless claims and pay rises, and argues a big supply increase allows growth without Phillips curve pressure.
Hosts say wages trail inflation. The hosts argue voters feel prices, and that personal income and wage growth are slowing below inflation. Hassett replies that census data will show real incomes up about $2,500 by the end of 2026, and says he is not denying inflation is a problem.
Energy costs reflect action against Iran. Hassett attributes the energy price rise to Trump's action against Iran's nuclear programme and says any patriotic president would have done the same given the same intelligence. The US has plenty of crude but lacks enough refined product.
October data will decide the Fed's move. Asked whether a hike fits ahead of the midterms, Hassett says September came in far above expectations and October CPI and PCE will clarify policy. Policy works slowly, and 30-year TIPS price long-term inflation near 2.1%.
Hassett now sees the FOMC as data-driven. The Fed held rates while Governor Lisa Cook and President Hammack dissented for a hike. Hassett, who previously feared the committee was political, praises Chairman Warsh for allowing normal dissent while driving consensus.
The Cook review will involve the White House. Hassett sits on a commission, crafted with reference to a Supreme Court ruling, reporting to Trump on Cook. He declines further comment but says the process will be fair, run by people of honor, with a December meeting agreed between the sides.
Measures easing the refined fuel shortage
The US Navy is helping ships pass through the straits.
Gulf states are building backup pipelines.
US refineries are expanding capacity.
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European countries are releasing strategic reserves of refined products after a negotiation the US just completed.