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Delta Variant Sparks Concerns About What's Next For U.S. Economic Recovery

NOEL KING, HOST:

During the pandemic, we kept hearing that even as the economy was cratering, some billionaires were getting richer. That is a true story. Now the economy is recovering, but inflation is higher than it's been in years. Investors and consumers are worried about the delta variant. And inequality has only gotten worse. What does the Biden administration plan to do about all of this? I asked Heather Boushey. She's a member of the White House Council of Economic Advisors.

HEATHER BOUSHEY: Let me start by reminding us just how far we've come just in the first six months of the Biden presidency. We have focused on building an economy from the bottom up and the middle out, focused on what was the most important thing over the winter - which was wrapping our hands around the pandemic, getting folks vaccinated so that we could get the economy back on track. We've seen that we've now created more jobs in the first five months than any administration in history. And the rate that we are creating jobs now is significantly higher than the rate that we were creating jobs back in the winter.

And so moving forward, the president's Build Back Better agenda says, where does the United States need to be competitive for the 21st century? Where is the innovation going to come from? Where are we going to be creating those new jobs and industries? And quite frankly, the biggest challenge facing the United States and the world is around climate change, and so that is core to the president's jobs agenda, is making sure that we're making those investments so that we can address climate change and create those good jobs here in the United States.

KING: I talked to Secretary of the Treasury Janet Yellen a few days ago, and she said the child tax credit should be made permanent. She said that without hesitation. What do you think? Should this be a permanent benefit for parents and caregivers?

BOUSHEY: Well, certainly, I think it is absolutely important, and we should do whatever we can to continue to extend it. You know, this extension - it was made as a part of the American Rescue Plan - was an important expansion of a long-standing benefit, and importantly, it makes sure that families even lower down the income spectrum are able to take advantage of the full tax credit, made it fully refundable and made it bigger.

KING: Injecting money into the economy does increase inflationary pressure, and the Fed has said it's temporary, and the Fed has given us some reasons behind inflation, like supply chains that got backed up during the pandemic. But we get the numbers, and then we freak out every month or so. Do you think we are missing something when we talk about inflation?

BOUSHEY: I do, actually. I mean, here's the thing with inflation. Now, what we are seeing is that we are recovering from this historic pandemic, and we know that it was, quite frankly, pretty easy to turn the economy off; we just sent everybody home. But turning the economy back on, getting those supply chains working across the economy - and not just our economy, but globally - that is a much bigger question. So we've seen supply chain disruptions because other countries haven't been able to get as many people vaccinated, and they've had to close down production, and that affects U.S. firms, and that affects the delivery to stores and all the things. So I think we need to have a little bit of patience in recovering from this massive global pandemic, and you can see that in the inflation numbers.

But we also know that this is likely to be temporary. And the most important thing - the Build Back Better agenda is focused on improving productivity and growth over the long haul, and that is going to keep prices down into the future.

KING: We keep hearing that inflation is temporary, but higher prices do get baked into the economy when people expect them to stay high and so they start demanding higher wages. And I guess the thing I'm asking is, why is everyone so convinced or why does everyone seem so convinced it's not going to happen again, that we're not going to see a repeat of the 1970s?

BOUSHEY: First of all, the Council of Economic Advisers did some research into this question, and it seems like this experience of recovering from a global pandemic is actually more akin to what happened after World War II, when people came back from the war and production had all been focused on the war and you had to shift into producing consumer goods. And that inflation was, you know, kind of like today's. It spiked up. But it was temporary. We think that is a better analogy than the 1970s, which was just a very, very different set of reasons why you were having inflation, very dissimilar to today's.

The second thing is that as we look forward, making sure that we are improving the productive capacity of the United States, that's how we're going to keep prices down for the long haul. So doing something like making these historic investments in child care means that families will be able to access that child care knowing that their children are well cared for and that it's good quality, and that's going to improve our labor supply, which will improve the capacity of our economy.

KING: To what degree is the delta variant keeping us from saying, this recovery is going fine, we expect this recovery to continue, everything is proceeding apace? How worried are you about the delta variant?

BOUSHEY: Well, the most important thing to getting the economy back on track is wrapping our hands around this pandemic. So I'm very concerned about the delta variant and what it means for our economy. We're still learning about it. The more we can get everyone vaccinated who's eligible, the easier it will be to deal with the delta variant.

KING: And we know that a lot of Americans are not willing, right? A lot of Americans are not willing to get the vaccine. A lot of Americans are not willing to put on masks or socially distance. Are you baking in the expectation that a lot of Americans are just not going to do what public health officials say they should get done?

BOUSHEY: Well, I think the thing is - is that we are in such a much stronger place today than we were in January 2020 because so many people have become vaccinated. And I think that there are a lot of stories now of people sort of seeing the light - like, oh, we do need to do this or, oh, this does seem to be safe. I think it's just really important that we continue to help people understand the importance of it and, you know, just focus on how this is the foundation for making sure that we're all healthy and safe and that we can get the economy back on track.

KING: Heather Boushey is a member of the White House Council of Economic Advisers. Heather, thank you so much for joining us. We really appreciate it.

BOUSHEY: Thank you. I really appreciate it.

(SOUNDBITE OF GOGO PENGUIN'S "TO THE NTH") Transcript provided by NPR, Copyright NPR.