Gov. Ron DeSantis fears inflation could snowball, a position that potentially pits the Governor against one of the state’s top economists.
DeSantis has spent recent weeks harping on rising consumer prices. And the topic jumped into the national conversation again this week when a senior Federal Reserve official said current inflation should no longer be considered “transitory.”
The Governor likened inflation to an “invisible tax” on Floridians that could snowball and cause other problems. Inflation nationwide is at a 13-year high.
“This inflation is real. This inflation is upending a lot of things,” DeSantis said Friday in Naples. “They said it was just going to be transitory. It’s not transitory. It’s real.”
That differed from what the Legislature’s chief economist, Amy Baker, told the Senate Appropriations Committee on Thursday. She called the inflation transitory but noted it will be more persistent than economists expected.
Transitory, when used to describe inflation, isn’t precise. Generally, the term is used to describe inflation that will naturally decrease and doesn’t require the Fed to intervene.
Some experts tie inflation directly to supply chain problems that have plagued the world and expect inflation to decline when trade recovers. Unlike those economists, but like DeSantis, Baker also sees federal pandemic relief programs as factors exacerbating inflation.
“Not that it wasn’t necessary to do, but whenever you flood that much money into the economy, it always has some perverse effects with it, but that would be transitory, too,” Baker said. “I believe within the year we should see it come back to some more normal, stable level.”
However, she still cautioned that inflation could be detrimental to the state’s projected economic growth.
The Governor’s Office and Baker haven’t always seen eye to eye. In a heated exchange during one budget meeting last year, Baker and an economist from the Governor’s Office clashed over corporate tax revenue projections, which DeSantis’ team thought should be higher. And until lawmakers expanded the budget in the final days of the 2021 Session, the Legislature and Baker were more bearish than the Governor’s Office on whether the blisteringly quick economic recovery was sustainable.
Gas prices are also at multiyear highs, but that’s not just because of global supply chain issues caused by the pandemic, DeSantis said. He questioned the Biden administration’s decision to close the Keystone Pipeline and not support domestic oil production like President Donald Trump did.
“We were the number one producer, and then now they’ve gone in this other direction, and now you’re relying on OPEC to be able to bail us out,” DeSantis said. “That’s not a position you want to be in.”
The Governor has frequently called the Sunshine State a beacon of freedom. On Friday, he called it a refuge for those frustrated by the trajectory of other parts of the country.
“The fear is, over the next however many months, that a lot of these these problems could potentially snowball,” DeSantis said. “So it’s a big, big concern.”