CNBC’s Joe Kernen pushed National Economic Council Director Kevin Hassett to “admit” that the rate of inflation going down is not the same as prices going down. “The President is constantly saying prices have come down,” Kernen said. “There are certain things that have come down. But when you keep saying prices are falling, that’s not true. The 3% inflation is on top of all the inflation we had during the Biden years. So we got all that inflation plus an additional 3%. And we should- I think you should admit that.” “This should give you a great deal of hope for the future, that the wage increases that we’re seeing will continue, and even if inflation stays positive, make it so that people feel way better when they go to the grocery store, to buy a car,” he said. “There are a million things we’re doing to fix this problem. But it’s just kind of astonishing to me that the cost problem is somehow being blamed on us now.” “A more precise way to say it, though, is that purchasing power has gone up,” Hassett said. “Real wages -that’s w divided by p for our technical people in the audience- have gone up by about $ 1,200 this year. So the way to think about it is that we’ve dug a $ 3,000 hole because of Biden policies, and we’ve gained $ 1,200 on the way out already.”

JOE KERNEN, CNBC: I have been fairly optimistic, when people come on, about the U.S. economy. I can find a lot of positive things. Why do you think “affordability” is such a buzzword right now? I mean, we lived through 9% inflation, and I think during the Biden years, it averaged over 5% for those four years. We’re at the highest levels that we’ve seen recently at 3%. Why all of a sudden is it- I don’t know. Is it Trump’s fault? KEVIN HASSETT, CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS: Right. Well, I mean, for sure, people still are trying to dig out from the big hole that was dug by the previous administration’s policies. So if you figure the typical mortgage payment, monthly mortgage payment, about doubled. If you look at a typical bag of groceries, the monthly bag of groceries cost about $ 400 when President Trump was leaving office last time and about $ 512 right about when President Trump took office. And since then, it’s gone up almost not at all. I think it’s like $ 515, but it hasn’t gone back to $ 400. And so what the Democrats are doing is they’re saying that this runaway spending that we gave you guys- that created runaway inflation- is 100% your fault because you haven’t fixed it already. And of course, that’s very economically illiterate, and I don’t think really many people in markets are buying it. JOE KERNEN: Well, I’ll tell you, Kevin, one of the reasons I think that people are- and I’m going to highlight both sides- one of the reasons people feel like they’re not keeping up is because real average weekly wages fell during the Biden years because of inflation. However, the President is constantly saying “prices have come down.” Now, inflation is still 3%. It’s still too high. Now, oil prices, energy prices- there are certain things where they have come down. But when you keep saying prices are falling, that’s not true because inflation is still- the 3% is on top of all the inflation we had during the Biden years. So we got all that inflation plus an additional 3%. And we should- I think you should admit that. KEVIN HASSETT: A more precise way to say it, though, Joe, is that purchasing power has gone up. And so real wages -that’s w divided by p for our technical people in the audience- have gone up by about $ 1,200 this year. So the way to think about it is that we’ve dug a $ 3,000 hole because of Biden policies, and we’ve, you know, gained $ 1,200 on the way out already. Which should give you a great deal of hope for the future, that the wage increases that we’re seeing will continue, and even if inflation stays positive, make it so that people feel way better when they go to the grocery store, to buy a car. You know, we’ve reduced the cost of buying a car with the deductibility of interest. I mean, there’s a million things that we’re doing to fix this problem. But it’s just kind of astonishing to me that the cost problem is somehow being blamed on us now. Think about it- especially with the Obamacare thing. Obamacare is 100% Democratic policy. It’s always been 100% Democratic policy. What they did is they expanded the subsidies during COVID, and then all those subsidies basically went right into the pockets of insurance companies. And Obamacare insurance policies have doubled in price relative to normal policies. And so the fastest inflation in the economy is these big government subsidies throwing Obamacare insurance- think about it. It’s kind of like if you give lots of student loans, then the tuition goes up. It’s that effect. And so now they’re blaming President Trump for Obamacare as well. They should have fixed Obamacare in the first place. And President Trump had a plan in the Big Beautiful Bill to give people some subsidies, but the Democrats didn’t like it because the subsidies weren’t going to their campaign contributors, the insurance companies. JOE KERNEN: The whole issue of tariffs: if we’re reversing some tariffs to try to help affordability, isn’t that acknowledging that the tariffs were responsible for some of the higher prices and for some of the inflation that is still a problem? KEVIN HASSETT: Well, first, this is nothing new. If you go through all the trade deals that we’ve been doing all the way through, then there have been things that we decided it was prudent- based on the economics of supply and demand- to exempt. And one of those things that we’ve been exempting all along is something that we don’t make in the U.S., we’ll never make in the U.S., or almost never. I know that in Hawaii they make some coffee. And so onshoring that production really doesn’t make sense. It’s not part of our strategy. And what the President just did with food is decide to make like a blanket movement so that we weren’t going through each deal and picking this and that.

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