How a top economic adviser to Biden is thinking about inflation and the job market

The latest numbers show a strong picture for the U.S. economy.

New figures show unemployment is down to 3.7%, and it's been under 4% for nearly two years now. Employers also added 199,000 jobs last month and wages keep rising. So why do so many Americans have a pessimistic view of the economy? Gallup's recent economic confidence poll shows that nearly three quarters of Americans think the economy is getting worse.

National Economic Council Director Lael Brainard, whose job it is to advise President Joe Biden on economic policy, spoke to All Things Considered host Ari Shapiro on Friday about what the numbers show and why inflation is still an issue.

This interview has been lightly edited for length and clarity.

Interview highlights

Ari Shapiro: When you look at this new data, unemployment is extremely low; wages are growing; job creation is strong. So what do you think are the biggest challenges right now? What's the number one problem that you're focused on trying to solve?

Lael Brainard: Well, before we get to challenges, I think it is important to just recognize how good the job market is: Another 199,000 jobs, 14 million more Americans working since the president came to office. What a change from where we were just over a year ago. If you think about it, inflation was very high and forecasters thought we couldn't get inflation down to where it is today without millions of people being unemployed. But that said, I think a lot of people still find that too many things are still too expensive.

Shapiro: So inflation is your number one concern right now?

Brainard: Yeah. So, I think the president very much thinks about the economy from the perspective of Americans sitting around their kitchen tables.

Shapiro: You know, one interesting data point is the rate that women have returned to the workforce. During the pandemic, women left their jobs at far greater rates than men, partly because those jobs were more likely to be eliminated, and partly because women bear a disproportionate child care burden. And this year, we saw the share of American women in the workforce hit a record high. Why do you think we've seen such a dramatic rebound?

Brainard: Well, I think that is a really notable feature. Again, if you think about some of the doom and gloom three years ago, people were talking about the Great Resignation, saying that women – particularly women with children – wouldn't be rejoining the labor force. But instead, what we've seen is a rebound in labor force participation for women overall, but particularly for prime age women, and that is in those prime working years of 25 to 54. And that includes mothers with young children. And I think that is in part a reflection of really strong child care policies that the president put into effect to make sure that people would have access to childcare at a time when a lot of child care centers were facing challenges. But it's also true because there's more flexibility in how many Americans are able to work right now.

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Shapiro: So despite the strong job market and rising wages and falling inflation, Americans do not think the economy is good. A majority of respondents told Gallup last month that they think the economy is getting worse, and that has been the case for almost every month of Biden's time in office. How do you account for this disconnect?

Brainard: Well, while the jobs picture is very bright, we know that many Americans are worried that some things are not affordable. And that's why the president is so focused on fighting to bring down costs for hard working Americans. For instance, the president believes it just isn't right that prescription drugs are practically unaffordable for many Americans, and that's why he's fighting to lower health care costs. He got great legislation to cap insulin costs for seniors at $35 a month. That's down for $400 for many. You know, we also are capping out-of-pocket drug costs for seniors at $2,000 per year. And Medicare has the authority now to negotiate prices, starting with 10 drugs next year.

Shapiro: And yet, do you think when roughly three quarters of Americans tell Gallup the economy is getting worse, it's because of something like insulin prices? I mean, the question seems to be broader than that, and I would think the answer comes from a sentiment that's broader than that.

Brainard: Well, actually, this morning we saw a really big jump up in consumer sentiment in the Michigan survey. And I think consumers are very focused on the costs that matter most to them. Health care is a huge affordability issue for so many Americans. But consumers are also tired of being hit by hidden fees. That's why we're cracking down on junk fees in everything from airline ticketing to credit cards to overdraft fees. And it's also really important, you know, now that we have fixed supply chains and input costs are coming down, corporations need to be passing those savings on to consumers. And we think that will go a long way to continuing that increase in consumer sentiment that we saw today.