On Thursday, June 29, Lael Brainard, President Biden's Chief Economic Advisor and the Director of the National Economic Council, said that the U.S. inflation data should improve in the second half of the year and likely drop to around 2% by the time of the November 2024 elections.
Brainard suggested that there is substantial reason to expect improvements in these figures in the latter half of the year, given the current policies. She also expressed optimism that U.S. inflation could fall to about 2% or slightly higher before the elections.
She went on to say that housing costs, which have been quite sticky so far, are also expected to significantly drop.
When asked about the risk of a U.S. recession, Brainard acknowledged forecasts suggesting a potential economic downturn within the next three to six months. However, she insisted on the strength and resilience of the U.S. economy, noting its steady progress and impressive performance. She expressed hopes for steady, sustainable growth, praising the current economic resilience.
Brainard also discussed her focus on the commercial real estate market. There are widespread expectations that the U.S. commercial property market will face losses in the coming months and years, particularly given the current surge in interest rates and shift towards hybrid working arrangements. For commercial real estate, Brainard highlighted the need to pay attention to office spaces in downtown areas of big cities, whose valuations are being adjusted due to changes in work patterns in the job market. While she noted that the risk of losses currently appears to be under control, she cautioned against overly optimistic views on this situation.
Regarding the issue of the federal debt ceiling, Brainard mentioned the close call the U.S. had with a debt default a few weeks ago. She stated that President Biden hopes to find a solution to this issue, whether it be a constitutional or legislative one.
She referred to laws requiring Congress to raise or suspend the debt ceiling as "hostage-taking," alluding to Republican insistence on cutting spending as a condition for suspending the debt ceiling. She indicated that this issue can't be resolved all at once, but didn't specify which mechanism the Biden administration prefers.
Brainard, a former Vice Chair of the Federal Reserve, transitioned to her current role as Director of the National Economic Council and became President Biden's Chief Economic Advisor in February. During her time at the Fed, Brainard was generally seen as a dove within the institution.
In addition to her dovish stance, Brainard is also a strong voice for financial regulation. Furthermore, she aligns closely with the Biden administration's stance on climate finance, community fairness, and digital currencies.
