White House: ‘We Don’t Want to See a Broad Deflation’

On Tuesday’s broadcast of CNBC’s “Squawk on the Street,” White House Council of Economic Advisers Chair Jared Bernstein stated that the White House doesn’t want to see “a broad deflation,” but “in areas where prices went up really a great deal and were highly elevated, there, you want to see prices come down, not just disinflation but deflation.”

Co-host Carl Quintanilla asked, “I’m sure it’s not a surprise to you that a lot of the public is not just looking for disinflation or slower inflation, but actual deflation, a rollback of prices back to, whatever, 2019 levels. Is that something you would welcome or do you lean on the historical relationship between that and falling wages and recessions?”

Bernstein responded, “I think a broad deflation is historically associated, just as you said, with a far weaker economy than we have and that we’d want to see. I think in areas where prices went up really a great deal and were highly elevated, there, you want to see prices come down, not just disinflation but deflation. So, let me hit you with a few numbers. So, airline tickets down 13% over the past year. Car rentals, 10%. Eggs, 22%. Thanksgiving dinner, to be a bit topical, down 4.5%, with turkey down about 6%. That’s deflation. That is lower prices in those areas. We don’t want to see a broad deflation, because that associates with a widespread, deep weakening of the economy. But in areas like used cars, down 7% — used cars and trucks. Those very elevated prices, yes, they have come down. We’d like to build on that progress.”

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