On Friday’s broadcast of Bloomberg’s “Bloomberg Markets,” Economics Professor at the University of Chicago Booth School of Business Austan Goolsbee, who served as Chairman of the Council of Economic Advisers under President Barack Obama, stated that the Inflation Reduction Act and CHIPS Act will have a “relatively modest” impact on immediate inflation.
Co-host Alix Steel asked, [relevant exchange begins around 41:55] “If we take a look at the supply side of the whole inflation debate and if the supply side and COVID shocks resolve soon, can the CHIPS Act and the Inflation Reduction Act meaningfully help with that?”
Goolsbee responded, “In the short run, I think not a lot. And you saw the analysis from several of the big, private forecasting companies as well as the CBO say that these are marginal impacts on short-run inflation. Because inflation is kind of a next six to 12-month phenomenon and almost all the money and investments in these things would be spread out over five years, ten years. So, I think the impact on immediate inflation’s going to be relatively modest. Though, there are certain categories, like prescription medicine, that, if they start negotiating drug prices, and you could get some various drug prices to come down, you would see meaningful reductions in inflation for those categories. But that’s different from the economy as a whole.”
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