Inflation 'out of control' when economy 'headed towards a recession,' Kevin Hassett warns
Former Council of Economic Advisers chair on inflation hitting fresh 40-year high
Inflation 'out of control' at a time when the economy 'is headed towards a recession': Kevin Hassett
Former Chairman of the Council of Economic Advisers Kevin Hassett weighs in on the Labor Department's inflation report for February, noting that 'wages aren't keeping up with prices,' which means 'real incomes are going down.'
Former Chairman of the Council of Economic Advisers Kevin Hassett warned on Thursday that inflation is "out of control" at a time when the economy "is headed towards a recession."
Hassett provided the insight on "Mornings with Maria" as he weighed in on the Labor Department's inflation report for February, which revealed that prices hit a fresh 40-year high last month, largely driven by higher gas prices.
The consumer price index climbed 7.9% on an annual basis, according to data released on Thursday by the Bureau of Labor Statistics. Month-over-month, inflation rose 0.8%.
The year-over-year reading is in-line with estimates and compares with an annual 7.5% jump in January, marking the fastest increase since February 1982, when inflation hit 7.6%.
Gas jumped 6.6% in February and accounted for almost a third of price hikes. Food rose by 1%.
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The February data does not include the Russia, Ukraine conflict which have pushed prices at the pump to $4.32 per AAA as of today, a record high.
Hassett noted on Thursday, shortly after the release of the report, that "wages aren't keeping up with prices," which means "real incomes are going down."
He warned that the next CPI report will reflect "way worse" data.
"The really, really big price spikes started to happen in March," Hassett told host Maria Bartiromo on Thursday.
He also noted that there are so many "key things that affect the global economy that have been impacted by this war in Ukraine, like corn."
Ukraine is a leading producer and exporter of the commodity.
Hassett went on to point out that "all that kind of stuff is going to make the March number way, way worse" than the February data.
Oil analyst warns recession currently 'unavoidable'
The Schork Group principal Stephen Schork warns that the average price for gas 'is going to remain high' and notes that 'as offshoot, food prices have to remain high.'
"The Fed hasn’t even started tightening yet and we’ve got this runaway inflation and a weakening economy," he said, adding that he believes "first quarter GDP [gross domestic product] is looking like it’s going to be negative."
A recession refers to a contraction in GDP activity, or economic output, for two consecutive quarters.
Hassett argued that one reason why he believes "the odds of recession are getting above 50%, is that you got a couple negative quarters in a row, then you ‘re in a recession and the first quarter is low enough right now, in the real-time data that we have, that it’s plausibly negative or at least really close to zero and so that’s like the first half of the start of a recession."
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The real-time data set consists of snapshots of major macroeconomic variables and can be used by macroeconomic researchers to forecast, according to the Federal Reserve Bank of Philadelphia.
"I think it’s just we’re in Joe Biden’s economy right now and it is really, really terrible," Hassett went on to say, arguing that "as bad as the exit from Afghanistan was, what he [Biden] has done to economy is probably just as bad."