On Friday’s broadcast of Bloomberg’s “Balance of Power,” White House Council of Economic Advisers Chair Jared Bernstein stated that bond market interest rates and mortgage rates have increased and that’s partially due to “the stronger economy” under President Joe Biden, but “I also think there’s a policy element going on in that spread, in that interest rate. And I think it has to do with the idea that one of the candidates is talking about massive tariffs — acting as a sales tax on the middle class –, massive deportations — terrible idea for the labor market –, and compromising Fed independence. That may also be putting some upward pressure on rates.”
Bernstein said, “Well, we’ve seen rates in the bond market be somewhat elevated. We’ve certainly see[n] the mortgage rate go up. And part of that has to do with the stronger economy. So, look, under President Biden — we got the GDP report this week — under President Biden, the annualized growth rate for GDP has been slightly north of 3%. That is a very strong, very much above-trend growth rate. So, strong growth, solid labor market, easing prices, real wage and income gains, certainly putting some upward pressure there. But I also think there’s a policy element going on in that spread, in that interest rate. And I think it has to do with the idea that one of the candidates is talking about massive tariffs — acting as a sales tax on the middle class –, massive deportations — terrible idea for the labor market –, and compromising Fed independence. That may also be putting some upward pressure on rates. And I think that’s just a sign of some of those destructive ideas.”
Follow Ian Hanchett on Twitter @IanHanchett