US government shutdown ‘unnecessary risk’ to resilient economy-Brainard

WASHINGTON (Reuters) -White House economic adviser Lael Brainard said on Friday that a government shutdown that could start this weekend was an “unnecessary risk” to a resilient economy now with moderating inflation.

Brainard told CNBC that avoiding a lapse in government funding was “completely in the hands of the House (of Representatives), the House Republicans in particular”, and that risks to the economy include active military service members going without pay, air traffic delays and poor Americans being unable to access government benefits.

Brainard said that U.S. Commerce Department data showing underlying annualized inflation excluding food and energy fell below 4% for the first time in more than two years in August was “absolutely good news” for the economy.

“The main story of all the naysayers was that you couldn’t get core inflation to come down without a big increase in job destruction. That is not what we’ve seen,” Brainard said. “We’ve seen continued job creation and inflation at the core has come down into the range that we saw pre-pandemic.”

Brainard said a shutdown would take a toll on workers who would be asked to provide “essential services to the American people without pay.

“It’s a completely unnecessary risk to an economy that’s otherwise proven so resilient,” she said.

(Reporting by David Lawder and Ann Saphir; editing by Philippa Fletcher)