White House National Economic Council Director Kevin Hassett analyzes the September CPI report, consumer spending and addresses negative views on the economy from voters on ‘Varney & Co.’
Americans are still spending, but frustration over inflation and borrowing costs is clouding how they feel about the economy, a disconnect the White House says it is trying to understand.
White House National Economic Council Director Kevin Hassett joined FOX Business’ Stuart Varney on “Varney & Co.” to discuss why consumers remain uneasy about the economy despite signs of continued spending and investment.
White House National Economic Council Director Kevin Hassett weighs in on why Americans remain concerned about the economy despite signs of strong consumer spending and economic growth. (Al Drago/Bloomberg / Getty Images)
The tension comes as higher energy costs put renewed pressure on inflation.
The Bureau of Labor Statistics (BLS) said on Wednesday that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – increased 0.6% on a monthly basis and is up 3.7% from a year ago.
Hassett attributed September’s disappointing inflation reading in part to attacks on energy infrastructure in the Middle East, while pointing to more stable prices in other categories.
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“But for sure, there was a top line number that was disappointed. But inside the top line there’s a lot of good news,” Hassett said.
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Mortgage rates are another challenge for households. Hassett said stronger income growth and lower inflation could eventually improve affordability, but cautioned against drawing conclusions from a single month of data.
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“We really need to see the next month before we make a judgment about whether it’s right for the Fed to do something about this,” he said.
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Even with those concerns, Hassett pointed to strong capital spending, factory construction and consumer demand. He said bank executives told him customers are continuing to make purchases rather than falling behind on their payments.
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“It’s a puzzle that we’re noodling about every day ourselves, because if you look at the top line data, you’ve got [a] capital spending boom unlike anything we’ve ever seen,” Hassett said of the gap between economic activity and public sentiment.
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He argued that worries about job security can weigh heavily on consumer confidence, even when broader spending remains resilient. Hassett also predicted a strong holiday shopping season, suggesting that Americans’ spending habits may paint a more optimistic picture than their views of the economy.
“My view is that the strength of the economy is visible,” he said.
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FOX Business’ Eric Revell contributed to this report
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