Julia Coronado, president of Macropolicy Perspectives who worked for the Federal Reserve Board of Governors, said the Biden administrations’ refined approach made sense by aiming to expand the amount of economic capacity — addressing supply-side concerns — rather than reducing the amount of spending support fueling consumer demand.
“They’re trying a new message: The message is, ‘We understand there’s inflation, and the right way to get at it is to invest in improving our supply chain, not pulling back on policy support for the economy.’ That’s a smart message,” Coronado said. “If you can relieve the pressure on these supply chains — not by hitting demand, but by improving infrastructure — you’re basically lifting the economy’s potential to meet that demand.”
But other experts said the inflation rhetoric reflects how many missed the extent of the political challenge posed by inflation.
“I think this reflects the fact that inflation has been higher and longer-lasting than the administration thought it would be or wants it to be,” said Adam Ozimek, an economist at Upwork. “There are economists who dismiss concerns about inflation, but clearly the administration does not agree with them. A lot of economists underestimated how big of a political problem this would be for the White House.”