White House economic adviser Kevin Hassett acknowledged Wednesday that Fox Business host Stuart Varney was “absolutely correct” in calling the latest inflation numbers “disappointing,” while insisting there is still plenty of good news for Americans.
Hassett joined Varney to discuss the latest September figures from the Bureau of Labor Statistics (BLS). According to the data, prices for gasoline, groceries and rent rose 0.6% for the month and 3.7% compared to a year ago.
Varney did not mince words when he raised the report with Hassett.
“The market doesn’t like this, interest rates are rising, it’s the last report heading into the midterms and it’s not real great on inflation, is it?” Varney asked.
“You’re absolutely right,” Hassett replied.
Hassett pointed to attacks by the Houthis on a Saudi pipeline as a factor driving up costs.
“What happened was that because the Houthis started attacking the Saudi pipeline and other Iranian proxies from Iraq were attacking refineries and so on, that we had a negative shock to energy again in September,” he said.
Hassett said much of that pressure has eased based on current data, though he acknowledged the headline figure fell short.
“Much of it has abated as we look at what the data looks like now, but for sure there was a top line number that was disappointing,” he said.
Still, the White House adviser argued the report contained encouraging signs that the top line number did not capture.
“But inside the top line number, there’s a lot of good news. So food prices were flat, drug prices, the biggest drops we’ve seen since the Second World War,” Hassett said. “You know, a lot Trump policies are helping to keep inflation down, but the energy shock is really the headline story today.”
The conversation then turned to mortgage rates, with Varney raising concerns about whether rates would continue climbing.
“Does the tick up keep going? I mean because you’re not going to get away from 7% mortgages in the future. That’s another negative,” Varney said.
Hassett laid out what he said needs to happen for mortgage rates to come down.
“The way you get away from 7% mortgages, two things happen, is income grows a lot so people can afford higher mortgages, and interest rates come down because you’re controlling inflation,” he said.
Hassett pointed to recent progress on inflation, describing September’s increase as a temporary setback.
“And over the last three months, there were a lot of positive signs that inflation was under control. If you look at core inflation, it was basically at the Fed’s target on average over the last three month. But this month was a blip up,” he said.
Hassett maintained that the broader economy remains strong, citing what he called a “capital spending boom.”
“It’s a puzzle that we’re noodling about every day ourselves, because if you look at the top line data, you’ve got [a] capital spending boom unlike anything we’ve ever seen,” he said.
“My view is that the strength of the economy is visible,” Hassett added.
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