A former Obama administration economist is warning that the economy is “overheated” and that there has been ‘little if any progress” made on tackling inflation during the Biden administration.
Jason Furman, who served as chairman of President Barack Obama’s Council of Economic Advisers, described the economy as “very overheated.”
“We have made little if any progress on inflation. There is little if any reason to expect a large slowdown going forward,” he said.
The consumer price index (CPI) rose 6.4% in January on an annual basis, hotter than expected, but remained steady compared to last month. While prices remain above 6%, they are down sharply from the 9.1% surge in June, which marked the highest inflation rate in almost 41 years.
Inflation is expected to remain roughly three times higher than the pre-pandemic average on an annualized basis, underscoring the persistent financial burden placed on millions of U.S. households by high prices.
In a tweet thread, Furman noted that some analysts had predicted that supply chains unfreezing were supposed to bring down inflation, but didn’t.
“The economy looked like it was turning last summer/fall but that never materialized,” he said.
He said there were some indicators of a possible fall in inflation, including the impact of monetary policy.
“So yes, more likely than not that inflation falls from its 4.7% pace. Maybe even into the 3’s,” he said.
“But there are still forces going in the direction of high inflation. In recent months goods prices have fallen, that likely won’t continue. And the extremely tight labor market has lagged effects on inflation,” he said.
“6% inflation is much more likely than 2% inflation.”
President Biden had said that inflation coming down was good news, but that there was still more to be done.
“There is still more work to do as we make this transition to more steady, stable growth, and there could be setbacks along the way,” he said in a statement when the numbers were released. “That is why my unwavering focus is on continuing to lower costs for families, rebuild our supply chains, and invest in America.”
He also took aim at Republicans for proposing repealing the “Inflation Reduction Act” and accused them of threatening to cut Medicare, Social Security and other programs.
“And some are threatening to default on the full faith and credit of the U.S., which would raise costs and create economic chaos. I will stand firmly against any effort to make inflation worse and increase costs for families,” he said. “Today’s data reinforces that we have made historic progress and are on the right track, and now we need to finish the job. “
Fox News’ Breck Dumas contributed to this report.
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