Some economists say fears about the Impact of president biden's economic Agenda on inflation are overblown the President signed a 1.2 trillion dollar Infrastructure bill on monday another Bill known as the build back better act And focusing on social and climate Spending is now heading to the senate on Friday president biden said the plans Will quote lower inflationary pressures On our economy some economists agree They say the wave of government spending Could actually provide relief in the Long term the consumer price index Soared in october up more than six Percent from a year ago that is the Biggest 12-month jump since 1990. Federal reserve chair jerome powell says He blames the pandemic recovery and Supply chain issues for rising prices For more on this i want to bring in cbs News money watch reporter amy peaky hi Amy great to see you so 17 nobel Laureates have said they believe President biden's spending bills will Ease Longer-term inflationary pressures What is the argument behind that why do Economists believe that these plans will Actually not drive up inflation rates Yeah that's a great question and thanks For asking that tanya i mean it's really Interesting because right now um the Biden administration is proposing
Putting trillions of dollars of funding Into An economy where inflation as you noted Is already really quite high and you Know usually when that happens it can Give people more money to spend and that Can raise inflation even higher So some lawmakers have expressed some Concern about this but these nobel Laureates are saying you know take a Step back and let's look at how this Money is going to be spent and what the Goal is And the goal is that To spend money to help people get back To work Is spending on child care is spending on Infrastructure In their in their view they're saying Okay this is going to ease some of the Supply issues that we've had you know One of the reasons why you have a supply Chain issue is because we don't have Enough workers right now we don't have Enough truckers to move goods from one Side of the country to the other So by helping people get back to work You know building better roads and Bridges this is going to help that Supply chain issue And it's going to increase our economic Capacity and in the long run they argue It will be better for the economy Overall
I did talk to a moody's economist about This as well and he said he also thinks That it's not going to add to Inflationary pressures And his point is that You need to look at the timing of these Bills um the money probably won't start Flowing into the economy until later Next year um and so you know at that Point hopefully economists hope that Inflation might be residing at that Point um So we will see i mean a lot of that Depends of course on what happens next Year and no one really has a crystal Ball and can tell And isn't one of the other arguments Also that you know this money is not Going directly into people's pockets for Them to go out and buy things it's Basically being invested in things that Could boost productivity like free pre-k Which means more women can go to work or Sort of there there's sort of um Investments that could create even more Uh i guess productivity as i said Yeah i mean i think that's a really Excellent point because um if you if you Look at the difference between these Bills and the stimulus spills that we Saw earlier in the pandemic they're Actually structured quite differently um The stimulus bills that we saw earlier In the pandemic were designed to keep
People from hardship And businesses from failing and the way The uh The administrations did this was to give Basically cash to people to businesses And people That's partly why economists say we're Seeing higher inflation right now is That you have all these households Millions of households with more cash Than they've had actually and they've Increased savings and now the pandemic They feel more comfortable they want to Go out and spend and that's creating Inflationary pressures these bills Aren't giving cash for the most part They aren't giving cash directly to People you know they're investing as you Said in child care to get people back to Work so it's a little bit different the Other thing to think about is um these Are bills that will invest in the Economy over uh five to ten years so It's not coming all at once like we saw With the earlier stimulus bill so that's Also something that a commerce economist Say um could help you know lead to uh Maybe not increasing inflate inflation But at least not um you know tampering It down a little bit and amy how long do Economists expect this current sort of Spat of inflation to last you know we Know partially it's because of an Overheated economy right demand is
Outstripping supply people want to buy Things and there's not enough of them Around so the prices for things are Going up Is that sort of a short-term problem or You know will that go away once these Supply chain issues are solved Yeah so i've talked with several Economists about this and you know for The most part economists are telling me That inflation will probably um go down In next year in 2022. um the reason They're saying this is because they Think that the supply chain issues will Resolve themselves at some point next Year more people will be going back to Work which will also help the supply Chain issues and just supply issues in General um but you know i'm just going To give a big caveat here is that you Know economists have often been wrong With their forecasts so i think it's Something that everybody's keeping a Close eye on and you know we'll we'll Just have to see what happens next year But in the near term economists say you Know inflation is going to stay high Maybe even get higher in the next few Months before it goes down but again That's just a forecast from economists So we'll see what happens Economists do not have crystal balls All right Amy pg thank you so much for joining us
We appreciate it Thanks tanya
