The economic fallout of the U.S. conflict in Iran will be temporary, National Economic Council Director Kevin Hassett said on Wednesday.
Hassett touted the Trump administration’s policies to reduce prices for items like eggs and said the economy can bounce back from a temporary increase in gas prices due to the Iran conflict.
“I’m not minimizing the stress that people have for higher gas prices,” Hassett said at the Axios’ News Shapers event in Washington, D.C. “But the ability for our resilient global economy to recover pretty quickly is well documented.”
On Feb. 28 the U.S. and Israel launched strikes against Iran. Since then Iran has blocked access to the Strait of Hormuz, a popular region for commercial ships and oil tankers to pass daily. Gas prices have surged since the conflict with the average rate more than $4 per gallon in the United States.
He said the administration is engaging in efforts to reduce costs incurred by the conflict in Iran. He pointed to the use of strategic oil reserves as an aid to the conflict.
“Our effort to reduce cost is basically minimizing the destruction for what President Trump and the foreign policy team all believe is a necessary effort to make it a more stable, peaceful world in the long run,” Hassett said.
Hassett criticized former presidential administrations for accepting higher inflation and worse economic conditions as the “new normal.” He said the Trump administration’s deregulation and domestic manufacturing has expanded the U.S. economy beyond what was previously imagined.
Hassett pointed to the administration’s tax policies, including tax breaks for tipped workers and those who earn overtime. He said these have benefitted Americans and they will see greater returns during tax season.
“This is one of the most progressive tax campaigns that I’ve ever seen in tax policy,” Hassett said.
Sen Chris Van Hollen, D-Md., criticized claims that the economy could withstand energy price shocks experienced due to the military conflict in Iran.
“They were going up before the wars and now they’re going up even further,” Van Hollen said about prices in the United States.
Van Hollen touted the Road to Housing Act, a piece of legislation that would increase the affordable housing supply across the country.
“Increase the housing supply,” Van Hollen said. “It doesn’t make sense to focus on one side of the equation and not the other point.”
The NEC director also addressed how the economy could be affected by a new chairman of the Federal Reserve. President Trump nominated Kevin Warsh to take over the position after a longstanding feud with chair Jerome Powell over lowering interest rates. Warsh is set to take over the position in May, after a confirmation hearing on April 21.
The U.S. Department of Justice launched an investigation into Powell as tensions with Trump escalated. Hassett said Warsh will be well suited to lead the Federal Reserve at this time but he stopped short of calling for an interest rate cut.
Hassett said the White House will likely not pressure Warsh to enact a rate cut immediately.
“Core inflation is at the lowest level since the Biden inflation began, and interest rates are higher than for comparable countries around the world,” Hassett said. “If I were a governor, I would be willing to cut rates because I realize that oil price shocks don’t lead to inflation.”
