“The comparison to a year ago is going to show that prices are up dramatically,” said Jill Schlesinger, CBS News business analyst and host of the podcasts “Jill on Money” and “Eye on Money.” Schlesinger spoke with CBS News chief Washington correspondent Major Garrett for this week’s episode of “The Takeout” podcast.
Highlights from this week’s episode:
- Jill Schlesinger on rising inflation: “The comparison to a year ago is going to show that prices are up dramatically
- The Federal Reserve’s ability to handle inflation: “Many economists fear that just the idea of trying to snuff out inflation will kill off the recovery.”
- Big companies able to raise wages while smaller companies cannot: “It’s just a case where the big keep getting bigger and squeezing the little guy out.”
- The housing market: “If you’re in the market right now, I would say, take a deep, collective, cleansing breath, my friends. It’s nuts out there.”
She offered the example of a sawmill that may have shut down at the beginning of the pandemic but was then caught short when there was an increased demand for lumber as people sought to renovate their houses while they worked from home. Similar supply bottlenecks can be identified in many markets.
“Now, demands are starting to surge for other goods and other services. So, put it together and you have prices going up,” Schlesinger said. But she doesn’t believe the country will see double digit inflation, as it did during the 1970s, and noted that the Federal Reserve also holds the opinion that the rise in inflation is temporary.
The Fed also believes that, even if prices don’t settle down, it has tools to fight inflation, such as raising interest rates and unloading bonds. But Schlesinger said that she was hearing from “freaked out” economists who are worried that the Fed often acts too late to employ its tools.
“Many economists fear that just the idea of trying to snuff out inflation will kill off the recovery,” Schlesinger said.
She also talked about the job losses over the past year and noted that there are still 8.4 million fewer jobs than existed pre-pandemic. Women, in particular, were affected because they were often forced to stay home during the pandemic as the primary caretakers for children or other family members. Schlesinger predicted that more women will return to the workforce when the majority of children return to in-person learning in the fall.
Another factor is the desire among many workers for higher wages. A frontline worker at a grocery store making $9 per hour may have decided that it was not worth it to risk their lives for a job when they could make more by staying home and collecting unemployment checks, as well as the additional unemployment benefits handed out by multiple coronavirus relief measures.
“They’re making the smart economic decision,” Schlesinger said about these Americans, pushing back against “accusatory” Republican lawmakers who have argued that additional unemployment benefits would act as a disincentive for people to return to work. “Thank you for being rational actors and taking the money.”
But Schlesinger predicted that these people would return to the workforce in the coming months, as the additional unemployment benefits are set to end in September, and.
Big employers that are already paying their workers a $15 minimum wage aren’t worried about people returning to work, Schlesinger said, but small employers who say they are unable to pay higher wages are concerned.
“It’s just a case where the big keep getting bigger and squeezing the little guy out,” Schlesinger said. “Millions of people are going to be coming into the labor force over the coming months, so ostensibly we should get a lot of jobs filled and wages should rise, but not by so much as to snuff out corporate profits.”
Schlesinger also spoke about theand urged people to wait to buy a house until they are financially ready. As a shortage of for-sale homes has continued to boost prices across the nation, she advised that “renting is always an option.”
“If you’re in the market right now, I would say, take a deep collective cleansing breath, my friends. It’s nuts out there,” Schlesinger said.
For more of Major’s conversation with Schlesinger, download “The Takeout” podcast on Art19, iTunes, Spotify, Google Podcasts, and Stitcher. New episodes are available every Friday morning. Also, you can watch “The Takeout” on CBSN Friday at 5pm, 9pm, and 12am ET and Saturday at 1pm, 9pm, and 12am ET. For a full archive of “The Takeout” episodes, visit www.takeoutpodcast.com. And you can listen to “The Takeout” on select CBS News Radio affiliates (check your local listings).
Producers: Arden Farhi, Jamie Benson, Jacob Rosen, Sara Cook and Eleanor Watson
CBSN Production: Eric Soussanin, Julia Boccagno and Grace Segers
Show email: [email protected]