White House sees greater chances for economic ‘soft landing’

6:41 pm Friday, December 15th, 2023

By Trevor Hunnicutt

WASHINGTON (Reuters) -U.S. President Joe Biden’s top economic adviser said on Friday that recent data shows the “width of the runway for a soft landing has gotten much bigger” and that immigration had helped the U.S. labor force rebound.

Lael Brainard, head of the White House’s National Economic Council, told reporters in Washington that “we’ve seen quite positive indicators that inflation really has come down” and could “continue to come down, while the economy is going to maintain strength going into the next year.”

Biden, a Democrat seeking reelection next year, has been dogged by voters’ economic concerns. Some 45% of U.S. adults polled by Reuters/Ipsos this month said Republican former President Donald Trump had a better approach on the economy, 33% picked Biden and the rest were unsure.

The Biden administration, Brainard said, is “still looking at everything we can do to lower costs.” Economists regard a soft landing as when policymakers succeed in slowing an economy enough to get inflation under control without causing a recession.

Federal Reserve chief Jerome Powell said on Wednesday that a historic move to tighten monetary policy is likely over as inflation falls faster than expected. Stocks have rallied, putting the benchmark S&P 500 index up some 23% for the year to date. [.N]

Brainard said that, while financial markets reflect a more positive view about the economy’s path, “it will take time for people to feel financially more secure.”

Inflation rose by 3.1% over the last year, measured by the consumer price index, slower than a peak of 9.1% in June 2022 but still uncomfortably high for many voters.

Trump has pushed for lower income taxes, higher tariffs on foreign imports and de-regulation of energy producers.

Brainard, a former vice chair of the Federal Reserve, credited easing inflation on Biden’s focus on tamping down supply chain issues from ocean shipping to semiconductors along with some 3 million more workers joining the labor force over the past year, a view shared by some outside economists.

“Immigration, or the share of foreign-born (people) in the workforce has been also an important contributor to the great rebound in the labor force over the course of the last year… That’s certainly a part of overall policy considerations,” she said.

Republicans have refused to approve more Ukraine funding without additional measures to reduce the record number of migrants attempting to cross the U.S. border illegally, leading to a complex negotiation pairing the largely unrelated issues.

Reuters reported earlier this week that the Biden administration is considering getting behind new restrictions on who can seek asylum and an expanded deportation process to secure the aid for Ukraine, citing a source familiar with discussions.

(Reporting by Trevor Hunnicutt; Writing by Katharine Jackson and Trevor Hunnicutt; editing by Rami Ayyub and Alistair Bell)