CBO Director: ‘Very Strong Demand Push’ and Fiscal Policies Are Fueling Inflation

On Friday’s broadcast of CNBC’s “Squawk Box,” CBO Director Phillip Swagel said that fiscal policies under the Trump and Biden administrations and “the very strong demand push we’ve had over the last two years” are a factor in high inflation.

Co-host Joe Kernen asked, “Phil, the inflation that we saw, the hot numbers yesterday, that we were just talking about, is that supply chain, is it energy, is it the low participation rate, is it what both the Trump and Biden administration did fiscally, is it what the Fed did in terms of money supply and the balance sheet? Is it all the above?”

Swagel responded, “Certainly, look, it’s definitely all of the above. It’s both demand and the very strong demand push we’ve had over the last two years, and then the supply chain issues you mentioned. Actually, I want to just put my — go back to…the labor supply. And there [are] about 2 or 2 1/2 million workers, this is people who, before the pandemic, would have been in the labor force, and they’re still out of the labor force. Now, some of them aren’t coming back, we know that, the older workers. But there [are] at least a million that we see still coming back as health concerns, childcare concerns, other things get resolved.”

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